Leading cryptocurrency exchange Coinbase announced it has received a Wells notice from the United States Securities and Exchange Commission (SEC) after a “cursory” investigation.
The SEC issues a Wells notice to entities after the conclusion of an investigation that states that it is planning to bring an enforcement action against them for possible violations of U.S. securities laws.
SEC Alerts Coinbase of Possible Enforcement Action
Coinbase said the notice is issued regarding its exchange as well as the staking service; Coinbase Earn, Coinbase Prime, and Coinbase Wallet.
The exchange noted that the latest notice from the Commission did not provide many details for it to respond to. However, it stated that the agency said they had identified potential violations of securities law regarding the aforementioned services.
The US-based exchange also stated that it had specifically asked the Commission to identify which assets they believe are securities on its platform, but the SEC declined to do so. Coinbase added that the Commission also refused to respond to several proposals it had provided about the registration of its services.
“We are prepared for this disappointing development. We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets,” the exchange said.
Coinbase noted that the notice would not mean any changes to its current products or services and will continue to operate as usual for now.
Not the First
This is not the first time the SEC will be issuing a Wells notice to Coinbase over its crypto offerings. In 2021, the Commission issued a notice to the exchange over its planned Lend program, which would have allowed customers to earn interest on their crypto assets. The exchange later canceled the launch after the SEC claimed the product is a security.
The SEC has been ramping up its enforcement action against crypto firms over the past several months following the collapse of cryptocurrency exchange FTX. Just last month, the agency sent a Wells notice to the crypto firm Paxos over the issuance of Binance USD (BUSD), the official stablecoin of leading crypto exchange Binance.
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