Cryptocurrency exchange Coinbase said it received a notice from Wells from the United States Securities and Exchange Commission recommending that the regulator take enforcement action.
In a March 22 blog post, Coinbase saying the "legal threat" could potentially target the exchange's staking program, Coinbase Earn; digital assets listed; her wallet; or Coinbase Prime services. A notice letter from Wells typically advises a company that the SEC may pursue enforcement action, but Coinbase provided no details other than "potential violations of securities laws."
โWe specifically asked the SEC to identify which assets on our platforms they believe may be securities, and they declined to do so,โ said Paul Grewal, Coinbase's chief legal officer. "Today's notice from Wells also comes after Coinbase provided multiple proposals to the SEC on the registry over the course of months, to which the SEC ultimately declined to respond."
1/ Today, Coinbase received a notice from Wells from the SEC focused on staking and asset listing. A notice from Wells generally precedes an enforcement action.
โBrian Armstrong (@brian_armstrong) March 22, 2023
The crypto exchange said that its products and services would "continue to operate as usual" amid the investigation. Grewal rejected the approach often quoted by SEC Chairman Gary Gensler โ meaning, โcome in and talk to us,โ stating that Coinbase met with SEC representatives โmore than 30 times over nine months,โ but received largely no comment on their proposals.
โAt no point in this investigation has the SEC told us of a single specific concern about a single asset on our platform. Going to a Wells notice now is unusual, to say the least."
Related: Coinbase's Bets Are 'Fundamentally Different' Than Kraken's: Lead Counsel
coin base filed a petition with the SEC on March 20 in an effort to explain to the regulator that participation is not necessarily universally considered a security. The exchange claimed that none of its listed assets were considered securities under the control of the regulator, and any potential targeting of its wallet was based on a โmisunderstanding of crypto products, assets, and servicesโ by the SEC.
The SEC had previously announced an agreement with Kraken in which the cryptocurrency exchange agreed to stop its participation program for US users. News of Wells' notice also followed the SEC announcing a lawsuit against Justin Sun and various celebrities for the offer, sale and promotion of Tron (TRX) and BitTorrent (BTT).
Related: Onโฆ SEC Takes Reactionary Action Against Crypto Lending
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