coindesk.com
Coinbase (COIN) stock slumped as much as 20% in early Nasdaq trading - before paring some of the losses on Thursday, after its disclosure that the U.S. Securities and Exchange Commission (SEC) said the crypto exchange may be violating securities laws.
COIN opened at $61.51 compared to its Wednesday close of $77.14.
On Wednesday, the SEC issued Coinbase a Wells notice, which informs businesses that it is planning future enforcement action against them. Coinbase said in a filing with the SEC that it believes any action "would relate to aspects of the company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet."
Prior to the market open, COIN was downgraded by Oppenheimer's Owen Lau to perform from its previous outperform rating, following the SEC's Wells notice. Lau also noted Tuesday's Economic Report of the President, which was less than favorable in its assessment of the crypto industry.
Wells notices do not always lead to enforcement actions. Coinbase has until March 29 to advise the SEC whether it intends to rebut the agency's findings.
Allegations of selling unregistered securities levied at crypto companies by the SEC have been commonplace in recent years, with Chair Gary Gensler regularly voicing this opinion.
The Wells notice to Coinbase came the same day the SEC sued Tron founder Justin Sun for the sale of unregistered, securities among other charges.
Read more: SEC Chair Gensler Says Crypto Exchanges May Not Be 'Qualified Custodians'