Coinbase, a crypto exchange, has recently received a Wells notice from the United States Securities and Exchange Commission (SEC), stating that the regulator might take enforcement action. Coinbase mentioned in a blog post that the SEC’s legal threat could possibly target its staking program, Coinbase Earn, listed digital assets, its wallet, or Coinbase Prime services. The notice warns the company that the SEC may follow with an enforcement action, but Coinbase provided no details, except for “possible violations of securities laws.” Coinbase also mentioned that it had submitted several proposals for registration to the SEC over the course of months, which the SEC ultimately refused to respond to. Coinbase chief legal officer, Paul Grewal, stated that Coinbase has met with SEC representatives “more than 30 times over nine months,” but largely did not receive feedback on its proposals. The SEC has not given any specific concerns about a single asset on Coinbase’s platform throughout the investigation.
Coinbase submitted a petition to the SEC on March 20 to explain to the regulator how staking might not necessarily be universally considered a security. According to the crypto exchange, the assets listed on its platform were not classified as securities within the regulatory authority’s scope. The exchange further argued that the SEC’s alleged targeting of its wallet was due to a misapprehension of crypto-related products, assets, and services. Grewal also mentioned that the approach often cited by SEC Chair Gary Gensler, i.e., “come in and talk to us,” has not been helpful, as Coinbase has already met with SEC representatives several times.
Coinbase stated that its products and services would “continue to operate as usual” amid the investigation. The Wells notice against Coinbase comes after the SEC announced a lawsuit against Justin Sun and several celebrities over the offering, sale, and touting of Tron (TRX) and BitTorrent (BTT), and a settlement with Kraken, in which the cryptocurrency exchange agreed to stop its staking program for U.S. users.
