- SEC accused Coinbase of violating securities laws in operating its staking and exchange services
- Coinbase indicated that the notice was not connected to its digital asset listing process
Crypto exchange Coinbase is facing enforcement action connected to listing assets that may potentially constitute unregistered securities, CoinDesk wrote.
Coinbase’s staking and exchange services presumed illegal
Coinbase reported that the SEC accused it of violating securities laws in operating its staking and exchange services.
The regulator sent the exchange a so-called Wells notice to inform that its planned future course of action may include a cease and desist order or an injunction. However, it didn’t specify how Coinbase had violated the law.
The Wells notice was addressed to Steven Peikin, Esq., and reads:
We advised you that the staff of the Securities and Exchange Commission has made a preliminary determination to recommend that the Commission file an enforcement action against your client, Coinbase, Inc. This proposed action would allege violations of Sections 5, 15(a), and 17A of the Securities Exchange Act of 1934 (“Exchange Act”) and Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”).
This is a preliminary notice, and won’t necessarily result in enforcement action as such. Coinbase will inform the regulator whether they accept or reject the latter’s findings regarding security law violations by March 29.
Legal threats instead of rules
Coinbase indicated that the notice was not connected to its digital asset listing process in a blog post on March 22. It was titled, “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead” and read:
Today, the SEC gave Coinbase a “Wells notice” regarding an undefined portion of our listed digital assets, our staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet after a cursory investigation. We are prepared for this disappointing outcome. 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.
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