SEC notifies Coinbase of potential securities violations

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Coinbase securities overview: 

• Who: The U.S. Securities and Exchange Commission has issued a Wells notice to Coinbase, warning it of potential violations of US securities law. 
• Why: Coinbase has said an investigation would be focused on its staking and asset listings and would not have an effect on its current offerings of products or services. 
• Where: Consumers nationwide use Coinbase.
• What are my options: Consumers looking for alternatives to Coinbase may be interested in Binance.

The U.S. Securities and Exchange Commission (SEC) warned Coinbase last week that the agency has identified violations of US securities law potentially committed by the popular cryptocurrency exchange. 

Coinbase shares dipped almost 12% following news last Wednesday that the SEC issued the company a Wells notice, CNBC reports.

A Wells notice is a letter sent by securities regulator to a respondent that informs them about charges it intends to bring, while giving them the opportunity to submit a written statement in response. 

Coinbase, meanwhile, has said that the Wells notice — which reportedly focused on staking and asset listings — would not cause the crypto exchange to make any changes to its current offering of products or services, CNBC reports. 

A potential SEC probe of Coinbase has been discussed since last Summer, at which time Coinbase shares dropped 21% amid reports the agency was planning to look into whether the exchange was offering unregistered securities. 

Coinbase describers any investigation into exchange as ‘cursory’

In a blog post, Coinbase described any investigation into it as “cursory” and said the Wells notice did not provide much information about the potential violations they are alleged to have possibly committed. 

“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,” Coinbase Chief Legal Officer Paul Grewal said in a blog post. 

Coinbase said it believes the potential enforcement actions are related to its spot market staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet, and that a potential civil action could seek injunctive relief, disgorgement, and civil penalties, CNBC reports. 

In January, Coinbase agreed to pay $100 million to the state of New York to resolve claims the company failed to abide by security measures that would allow it to properly safeguard its exchange from both money laundering and bad actors. 

The claims against Coinbase were brought by the New York State Department of Financial Services. 

Are you concerned about a potential SEC probe of Coinbase? Let us know in the comments! 

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