SEC Warns Coinbase Over Potential Securities Law Violations
- Coinbase has received a Wells Notice from the U.S. SEC, a letter warning a company that the regulator might take enforcement action against it.
- The SEC staff said it had identified potential violations of securities law, but declined to specifically identify which aspects of Coinbase’s business were considered securities.
Coinbase CEO Brian Armstrong at Vanity Fair’s New Establishment Summit, October 2019.Vanity Fair
Cryptocurrency exchange Coinbase received a warning from the U.S. Securities and Exchange Commission that it has identified potential violations of securities law, the company said in a blog post on 22 March.
According to the announcement, the U.S.-based exchange received a “Wells Notice” from the regulator — letter warning a company that the SEC may take enforcement action — who alleged that some of Coinbase’s services may be violating securities law. The exchange noted that the aspects of its business that may targeted by the SEC included its Coinbase Earn staking program, listed digital assets, Coinbase Wallet, and its Prime service. Coinbase’s Chief Legal Officer, Paul Grewal, said on Twitter:
Grewal further noted that exchange welcomes a legal process so that it could provide clarity around the regulation of digital assets, something Coinbase has been advocating for a while. He also explained that the exchange has met with the SEC more than 30 times in the past 9 months, sharing details of its business in order to “build a path to registration”, but the regulator gave it zero feedback on what needs to be changed.
The company said that the Wells Notice did not provide a lot of information, just that the SEC had identified potential violations of securities law. The exchange aksed the SEC to specifically identify which assets on the platform they believed were securities, but the regulator declined to do so. Coinbase explained that it will continue to operate its products and services “as usual” while undergoing this investigation. The Wells Notice came shortly after Coinbase submitted a petition to the regulator in an effort to explain why staking should not be universally labled as securities.
- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
Shutterstock
- Coinbase’s Base blockchain was made available to the public on Wednesday, featuring over 100 dApps and services as part of its ecosystem.
- In order to show its capabilities and promote its mainnet partners, Base has also launched an event called “Onchain Summer” that will allow users to mint exclusive NFTs on the network.
- During an interview with FT, CEO Brian Armstrong said that before the lawsuit a SEC staff member had said that all crypto except BTC was security, and should be delisted.
- When asked how he came to that conclusion, the SEC staff member reportedly said “we’re not going to explain it to you, you need to delist every asset other that Bitcoin”.