Situation Bad For Coinbase, US SEC May Drag It To Court For Potential Violations
The latest reports coming in from Coinbase have revealed that the exchange has recently been served with a “Wells Notice”. The sources have confirmed that the particular notice was received on Wednesday.
Wells Notice from US SEC
As per the exchange officials, the US Securities and Exchange Commission has sent them a “Wells Notice”. In the notice, the regulator has claimed that the Coinbase brand has been involved in potential violations of securities laws.
As communicated by the officials at the exchange, the US SEC has sent them the notice of the digital assets listed on their platform. The securities regulator has not specified the digital assets that they are currently investigating.
In addition to the digital assets, the regulator is also after a cursory investigation against many services their exchange is offering. These services include the Coinbase Wallet, Coinbase Prime, and Coinbase Earn.
Statement Issued by Coinbase
Coinbase issued a statement in response to the notice received from the regulator. They said that they have not been provided with much details and information pertaining to the investigation.
The regulator has not even revealed what kind of violations they have committed through the assets offered from their platform and their services.
The exchange officials did mention that they tried asking around at the office of the US SEC to know exactly what has happened. Some of them mentioned that they had established that the exchange was in violation of some of the securities laws.
However, the matter is currently under investigation so these have been referred to as potential violations.
No Identification of Assets by the Regulator
The teams at the exchange did mention that they tried asking the US SEC representatives to specify the assets that were violating the law.
However, representatives at the securities regulator denied their request. This means that the situation is still unclear and it is yet to be established which assets may put the exchange in trouble.
For those not clear about the Wells Notice, it is an act of enforcement that acts as a warning and an intimation. It is served to the entities that may be potentially in violation of the securities laws.
In such cases, the next course of action by the enforcement authority is the request for data for the particular assets or services that have to be investigated.
Statement from Brian Armstrong
The CEO of Coinbase shed some light on the matter talking about the interaction between the US SEC and the exchange two years back.
He stated that they are confident that their exchange is in breach of no securities laws or regulations. This is because they did everything by the book and had acquired approvals from the relevant regulators before going public.
It was the US SEC that had reviewed their business in detail and after a careful reviewing process, they allowed them to go public.
If they did not object to their services back then, why would they go against their services all of a sudden?
He revealed that in their initial filing at the US SEC, they had revealed all the assets, listings, services, and references to the regulator.
Therefore, it is pointless for the US SEC to claim potential violations with their businesses and assets all of a sudden.
The contradiction of Actions from Both Sides
It was recently claimed by Gary Gensler, the SEC Chairman, they had reached out to all the crypto companies asking them to register their businesses.
This meant that the crypto businesses in the country were given time to register their businesses so they could avoid facing regulatory scrutiny.
Armstrong has issued a contradictory statement against Gensler’s claim. He has revealed that what Gensler says has no authenticity and he can prove that.
According to the Coinbase CEO, they had approached the regulatory authority several times to register their business. Every time they did, they received no response from the authority.
At the moment, the matter is with the US SEC and there is no clarity. Despite the ambiguity, the situation does not look favorable for the exchange.