Coinbase might face SEC enforcement action for ‘possible securities law violations’
The crypto exchange said that none of its listed assets were considered securities, and that any potential targeting of its wallet was the result of a “misunderstanding” by Securities and Exchange Commission officials in the United States.
The US Securities and firm Commission has issued a Wells notice to cryptocurrency firm Coinbase, recommending that the regulator take enforcement action.
Coinbase stated in a March 22 blog post that the “legal threat” might affect the exchange’s staking program, Coinbase Earn; listed digital assets; its wallet; or Coinbase Prime services. A Wells warning letter normally notifies a business that the SEC may take enforcement action, but Coinbase just offered “possible violations of securities laws.”
“We specifically requested that the SEC identify which assets on our platforms they believe may be securities, and they declined,” said Coinbase chief legal officer Paul Grewal. “Today’s Wells notice also comes after Coinbase submitted multiple registration proposals to the SEC over the course of months, all of which the SEC ultimately refused to respond to.”
During the probe, the crypto exchange said its products and services would “continue to operate as usual.” Grewal criticized SEC Chair Gary Gensler’s strategy of “come in and talk to us,” alleging that Coinbase met with SEC representatives “more than 30 times over nine months” but received little response on its recommendations.
Coinbase filed a petition with the SEC on March 20 in an attempt to explain to the agency why staking is not always deemed a security. The exchange argued that none of its listed assets were securities under the SEC’s jurisdiction, and that any prospective targeting of its wallet was based on the SEC’s “misunderstanding of crypto products, assets, and services.”
The SEC earlier announced a settlement with Kraken under which the cryptocurrency exchange agreed to discontinue its staking program for US users. The Wells warning came on the heels of the SEC filing a lawsuit against Justin Sun and many celebrities for providing, selling, and advocating Tron and BitTorrent. (BTT).