Coinbase receives Wells Notice from SEC relating to securities law violations
- Coinbase received a Wells Notice by the SEC today
- The notice is related to services provided by the exchange, which includes its Earn program
The United States Securities and Exchanges Commission (SEC) has been actively involved in the crypto market for the past few weeks. The commission that laid securities law violations against Justin Sun has also made a move against the leading American crypto exchange – Coinbase. Notably, the commission sent a Wells Notice to the crypto exchange on March 22, 2023, as per an SEC filing.
Coinbase might face enforcement action
A Wells Notice informs the company or individual that the commission is planning to take enforcement action against them. Moreover, the notice is with regard to securities violations, with the filing stating,
“the Staff has advised the Company that it made a “preliminary determination” to recommend that the SEC file an enforcement action against the Company alleging violations of the federal securities laws, including the Securities Exchange Act of 1934,”
The filing further states that the possible action could come in relation to its lending service – Coinbase Earn and some matters related to its spot market, Coinbase Prime, and Wallet services. Speaking about the notice, Brian Armstrong – the CEO of Coinbase – stated that the commission knew about the exchange’s listing process before it went public. Armstrong also highlighted that their S1 filing had 57 references to staking, further stating,
“Going forward the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets.”
Coinbase is not the only exchange pulled up for lending services
Notably, Coinbase is not the only American-based crypto exchange to fall under the SEC’s radar for staking services. Previously, the SEC announced charges against Gemini – another leading American exchange – for its Earn program. The commission claimed that this offering falls under securities law and that the exchange should have registered with the regulatory body.
Moreover, earlier today, the commission unveiled charges against Tron’s Justin Sun. The commission claimed that TRX and BitTorrent (BTT) tokens were securities. Additionally, the SEC laid charges against eight celebrities for promoting the unregistered securities.