Last Minute: The SEC Has Sent A Warning To This Cryptocurrency Exchange Threatening A Lawsuit!

According to the latest information, cryptocurrency exchange Coinbase has received a warning Wells Notice from the SEC.

On March 22, 2023, Coinbase received a “Notice of Wells” from the SEC stating that it had issued a “preliminary ruling” recommending that institution personnel file a enforcement action against the Company for alleged violations of federal securities laws.

The notice pertains to the company’s exchange, staking service, Coinbase Earn and Coinbase Wallet.

Wells Notice to Cryptocurrency Exchange Coinbase Not Yet An Official Charge

A Wells Notice is a formal notice given to a company or individual by the U.S. Securities and Exchange Commission (SEC) stating that the SEC is considering sanctions against them. The notice is usually sent after the SEC conducts an investigation and finds evidence of possible violations of securities laws.

The Wells Statement is not a formal accusation, but a warning that SEC personnel intend to propose enforcement action, and gives the company or individual an opportunity to respond and present arguments in their defense. This gives the recipient of the notice the opportunity to persuade the SEC not to press charges or to prepare a defense in case of impeachment.

In the case of Coinbase, the Wells Statement shows that the SEC made a preliminary ruling to recommend sanctions against the company for alleged violations of federal securities laws. It is important to note that receiving a Wells Notice does not necessarily mean that charges will be filed, and Coinbase will have the opportunity to respond to the SEC’s concerns before any enforcement action is taken.

Coinbase stated that it “asked the SEC for reasonable crypto rules for Americans, but instead received legal threats.”
The company went into the details of the investigation in its blog post:

“Coinbase has received a “Wells Notice” from the US Securities and Exchange Commission (SEC) regarding certain listed digital assets, Coinbase Earn, Coinbase Prime and Coinbase Wallet, and following a preliminary investigation. A Wells Notice notifies a company that SEC personnel have recommended that the SEC impose sanctions for potential violations of securities laws. This is not an official accusation, but it can lead to an accusation.

We are prepared for this disappointing outcome. We trust the legality of our assets and services. If necessary, we welcome a legal process to ensure the legal clarity we advocate and demonstrate that the SEC is not fair or unreasonable when it comes to its work on digital assets.“

Coinbase said it was disappointed by the notice, as it spent millions of dollars on legal support and invited the SEC to ask questions about any assets on its platform, but did not receive a response.

The company added that the SEC canceled a scheduled meeting with it in January and now appears to have changed its stance on registering with the institution for Coinbase.

Coinbase stated that it is confident in the way it conducts its operations and that its products and services will continue to operate as usual.

Coinbase CEO Brian Armstrong evaluated the last step of the SEC to the stock market as follows:

“Today, Coinbase received a Wells notice from the SEC focusing on staking and asset listings. A Wells notice usually precedes an act of enforcement.

Two years ago, the SEC thoroughly scrutinized our activities and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase maintains a scrutiny of assets and has rejected more than 90% of assets that applied for listing on the platform.

While we understand that this is all part of a journey to reform our financial system, we trust the law and the facts, and welcome the opportunity for Coinbase (and thus the general crypto community) to appear in court.

In these moments, we are proud to defend our customers and the industry.
Going forward, due process will provide an open and public forum before an impartial body, where we can make it clear to everyone that the SEC is not fair, unreasonable, or even showing a seriousness of purpose when it comes to its engagement with digital assets.

In the meantime, Coinbase will continue to do what it does best: develop the most reliable products and services to innovate the financial system and advance our cause of greater economic freedom in the world.

We are excited to work with all countries and regulators around the world focused on setting clear rules to regulate the cryptocurrency industry.”

1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.

— Brian Armstrong (@brian_armstrong) March 22, 2023

*Not investment advice.