SEC Informs Crypto Exchange Coinbase of Potential Securities Law Violations

Coinbase, a cryptocurrency exchange (Nasdaq : COIN), announced Wednesday that it received a Wells notice’ by the U.S Securities and Exchange Commission. This notice’regards an unspecified portion our listed digital assets. Our staking service Coinbase Earn and Coinbase Prime and Coinbase Wallet, after a cursory examination.

Coinbase is described in a blog article:

The Wells notice today does not contain a lot of information that we can respond to. Although they claimed to have found potential violations of securities laws, the SEC staff provided little else.

“We asked the SEC to specifically identify assets on our platforms that they believed may be securities. They declined,” the exchange stated.

On Twitter, Coinbase CEO Brian Armstrong stated that a Wells notice usually precedes enforcement actions. “Two years ago, the SEC reviewed our company in detail and approved Coinbase’s public listing. The executive explained that our S1 [filing] clearly described our asset listing process, and contained 57 references to staking.

Gary Gensler, Chairman of the SEC, has often encouraged crypto companies to register with securities regulators. Coinbase made this observation Wednesday:

We tried, but the SEC won’t allow crypto companies to ‘come into and register’.

The Nasdaq-listed cryptocurrency platform stated that it doesn’t list securities tokens or offer products that could be considered securities. Coinbase stated that it had repeatedly invited the SEC “to raise any questions about any assets on our platform,” and added that they had raised none.

According to the exchange, “We met with SEC more than thirty times in nine months, but it was us who were doing all the talking.”

The exchange noted that Coinbase had a rigorous process of analyzing and reviewing each digital asset before it was made available on its exchange. This process was shared with the SEC as part our public listing.

The bottom line is that Coinbase does NOT list securities, nor do we offer securities-related products to customers.

The SEC initiated an investigation into Kraken’s staking program in February. To settle with the securities regulator, the cryptocurrency exchange paid $30,000,000 and ended the program available to U.S. users.