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    Coinbase Receives An SEC Wells Notice And Stocks Drop

    The Coinbase market stocks dropped about 10% in value after the company received a Wells notice from the SEC (U.S. Securities and Exchange Commission) on Wednesday.

    Wells Notice: It is a formal notice from the SEC informing a recipient that the agency is planning to bring enforcement actions against them.

    This isn’t the first move pulled by the SEC. Recently, the Commission sued crypto mogul Justin Sun for allegedly violating securities rules.

    Not to mention that a month ago, the SEC fined Kraken exchange $30 Million for its staking program. Isn’t this war on Crypto trading platforms escalating far too quickly? 

    In response to this, Coinbase’s Chief Legal Officer Paul Grewal said: “Until this settlement, the Commission had not conveyed that it might consider staking services to constitute an investment contract and therefore a securities offering requiring registration with the SEC.”

    He continued: “And the SEC had not previously made this position known despite ample opportunity to engage the crypto industry and its participants with its concerns.”

    Alas, the crack-down saga continues!

    Coinbase And SEC Saga 

    Back in July, Coinbase filed a petition to the SEC asking it to begin a public rulemaking process to clarify which digital assets it considers to be securities. Basically, they’re calling for the development of new rules and regulations for this fairly new asset class. 

    But since the collapse of FTX in November left investors facing billions of dollars of losses, the SEC’s Chair Gary Gensler is being extremely aggressive in charging whoever breaches securities laws. 

    We are witnessing a protracted legal fight. Since Coinbase is very clear that they want to defend its position. While the SEC is not having any of it… 

    A Decrypt source close to the Coinbase leadership said that the latter is “frustrated” that the SEC has allowed American investors to participate in crypto for years before “suddenly deciding to pull the rug out.” 

    Frustrating indeed.

    The SEC sticks to its ruling that many of the tokens and products offered by crypto companies are considered securities. So, trading platforms need to register with the agency.

    Coinbase Receives Wells Notice From SEC

    On Wednesday, Coinbase released a blog post written by CLO Paul Grewel entitled “We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead.” Ouch… 

    In detail, Coinbase said that the Wells notice they received from the SEC “does not provide a lot of information for us to respond to. The SEC staff told us they have identified potential violations of securities law, but little more.”

    It’s worth noting that Coinbase CEO Ben Armstrong called out the SEC for allowing the company to go public 2 years ago disregarding the 57 references to staking in their asset listing process… 

    Without a doubt, the crackdown on crypto in the U.S. will continue to have huge repercussions on the whole sector. Coinbase is already looking to operate in friendlier jurisdictions, check out that story here!

    How will the rest of the year play out? And what will Crypto firms do in response? We’ll have to wait and see.

    As always, stay tuned for more!

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