Global crypto exchange Coinbase receives a “Wells notice” from the U.S. Securities and Exchange Commission (SEC) shocking the crypto community, along with the executives of the exchange.
Coinbase Chief Legal Officer Paul Grewal stated in a blog post: “Today’s Wells notice also comes after Coinbase provided multiple proposals to the SEC about registration over the course of months, all of which the SEC ultimately refused to respond to.”
A Wells notice is given as a warning before the regulator takes any charges against the entity. Grewal notes that Coinbase made many registration-related proposals to the SEC over the course of several months, all of which the watchdog eventually rejected before issuing Wells notice.
SEC reportedly issued the Wells notice regarding Coinbase’s listed digital assets, Coinbase Earn, Coinbase Prime, and Coinbase Wallet. The regulator is trying to pull them down for possible violation of securities laws.
Coinbase products and services will continue to function normally in the meantime, as the inquiry is in its early phases.
“Regulatory uncertainty in the crypto industry is getting worse. Instead of developing a regulatory framework for crypto, the SEC is continuing to regulate by enforcement only,” says Grewal.
Coinbase CEO Brian Armstrong tweeted: “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.”
Since forever, Coinbase and the SEC have been at odds. Even while the team was willing to participate in discussions with the SEC, they were consistently faced with a lack of enthusiasm, and the exchange slammed the watchdog for its confusion regarding the crypto sector.
SEC is already classifying certain crypto assets as securities, and cracking down on crypto platforms for selling the same without registering with the regulator. Meanwhile, there is still no clarity on how they decided to categorize them as securities causing a dilemma in the community.
A few days back, Coinbase filed an amicus brief in support of a motion to dismiss the SEC’s insider trading prosecution of former Coinbase product manager Ishan Wahi. The exchange denied selling securities but stated that if regulation was not in a “state of uncertainty” it would like to sell digital asset securities.
Following the Terra, FTX, and multiple other debacles, regulators all around the world are being cautious about the crypto industry but they still appear to be ripping their heads apart trying to regulate the same.