US SEC Considers Slapping Securities Violation Charges on Coinbase
On Wednesday, March 22, the US Securities and Exchange Commission (SEC) issued a Wells Notice to Coinbase over their undefined potion of listed cryptocurrencies along with its staking service Coinbase Earn, and other crypto services.
Coinbase has appraised the crypto industry of this matter through a detailed blog post. Through a Wells Notice, the SEC staff is basically telling Coinbase that they are recommending the SEC to take enforcement action over the possible violation of securities laws. Note that it’s still not a formal lawsuit against Coinbase.
However, as we know, Coinbase has been at the odds with the SEC over bringing clear regulatory rules. The exchange said that while they asked for reasonable crypto rules for Americans, they got legal threats instead.
But Coinbase is confident of no wrong doing and assures customers that its products and services continue to operate as usual. Coinbase’s chief legal officer Paul Grewal noted that the exchange is confident in the legality of their products and services, and might also consider taking the matter to the court, if required. This would allow Coinbase to put its case open among the broader crypto community.
The crypto exchange said that they have also been trying to engage with the SEC in a meaningful manner, especially seeking guidance on registering several portions of their business. However, there has been no concrete response from the SEC over this.
In his blog post, Grewal further added that regulatory uncertainty in the US is getting worst. He writes that the SEC has sadly chosen regulation by enforcement instead of regulation through guidance.
Over the listing of its digital assets, Coinbase said that it has a through process to analyse and review each asset before making it available on the platform. Thus, there’s no question of them listing securities.
Coinbase CEO Brian Armstrong also wrote a detailed thread noting that they conducted rigorous due diligence with the SEC before going public back in 2021. In his tweets, Armstrong wrote:
“While we understand that this is all part of the journey to reforming our financial system, we are right on the law, confident in the facts, and welcome the opportunity for Coinbase (and by extension the broader crypto community) to get before a court. Going forward the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets”.
On Wednesday, March 22, the Coinbase (NASDAQ: COIN) stock tanked 8% during trading hours and another 15% in the aftermarket hours following the SEC action. After Ripple, will the SEC undertake another major battle with the crypto giant?