Coinbase Issued Wells Notice By SEC

Republished By Plato

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Reuters | March 22, 2023

The U.S. Securities and Exchange Commission (SEC) has threatened to sue Coinbase Global Inc over some of the crypto exchange’s products, turning up the heat on the largely unregulated sector.

The potential enforcement actions would be tied to aspects of Coinbase’s spot market as well as its Earn, Prime and Wallet products, the company said.
Shares of Coinbase dropped nearly 13% to $67.33 in extended trading after the company said on Wednesday that the regulator had issued it a Wells notice – a formal declaration that SEC staff intend to recommend an enforcement action.
Coinbase said its services continued to operate as usual after the notice was issued.

See: Coinbase Begins ‘Wallet as a Service’ Enabling Companies to Integrate Into Their Own Apps

A Wells notice does not always result in charges or signal that the recipient has violated any law. A Wells notice is typically one of the final steps before the SEC formally issues charges. It generally lays out the framework of the regulatory argument and offers the potentially accused an opportunity to rebut the SEC’s claims.

Coinbase Chief Legal Officer Paul Grewal said in a blog post:

Although we don’t take this development lightly, we are very confident in the way we run our business – the same business we presented to the SEC in order for us to become a public company in 2021.

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