Crypto exchange Coinbase said it had received a Wells notice from the United States Securities and Exchange Commission recommending that regulators take enforcement action.
In a March 22 blog post, Coinbase said a potential “legal threat” could target the exchange’s staking program, Coinbase Earn; registered digital assets; his wallet; or the Coinbase Prime service. Wells’ letter typically warns the company that the SEC may pursue enforcement action, but Coinbase offered no other details other than “possible securities law violations.”
“We asked the SEC specifically to identify the assets on our platform that they believed could be securities, and they refused to do so,” said Coinbase’s chief legal officer Paul Grewal. “Today’s Wells announcement also comes after Coinbase submitted multiple proposals to the SEC regarding registration over the course of several months, all of which the SEC ultimately refused to respond to.”
1 / Today Coinbase received the Wells notice from the SEC focusing on staking and asset listing. A Wells notice usually precedes enforcement action.
— Brian Armstrong (@brian_armstrong) March 22, 2023
The crypto exchange said its products and services will “continue to operate as usual” amid the investigation. Grewal rejected the oft-cited approach by SEC Chairman Gary Gensler — that is, “come in and talk to us” — claiming that Coinbase met with SEC representatives “more than 30 times over nine months” but generally did not receive feedback on the proposal. .
“At no point in this investigation did the SEC tell us of any specific concerns about a single asset on our platform. To go to Wells’ news now, at least it’s not public.
related: Coinbase staking ‘fundamentally different’ to Kraken – chief lawyer
Coinbase submitted a petition to the SEC on March 20 in an attempt to explain to regulators that staking may not be universally considered a security. The exchange stated that none of its listed assets are considered securities under the regulator, and that the potential targeting of the wallet was based on a “misunderstanding of crypto products, assets and services” by the SEC.
The SEC has previously announced a settlement with Kraken in which the cryptocurrency exchange agreed to end its staking program for US users. Wells’ news release also accompanies the SEC’s announcement of a lawsuit against Justin Sun and several celebrities over the offering, selling and touting of Tron (TRX) and BitTorrent (BTT).
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