Coinbase Responds To SEC’s Wells Notice

Coinbase Responds To SEC’s Wells Notice

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After being served with a Wells notice by the U.S. Securities and Exchange Commission, the crypto platform released a public statement calling out the regulator for being “unreasonable.” 

Coinbase Issued “Unfair” Wells Notice

On Wednesday, Coinbase responded to the SEC’s “Wells notice” with a public statement, calling out the regulator’s “unfair and unreasonable” approach towards the crypto platform and its operations. The team expresses deep disappointment, claiming it was served the “Wells notice” over an unspecified portion of its listed digital assets, its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. It also accuses the SEC of serving notice after the most minimal, cursory investigation. 

The team wrote, 

“We continue to think rulemaking and legislation are better tools for defining the law for our industry than enforcement actions. But if necessary, we welcome the opportunity for Coinbase and the broader crypto community to get clarity in court.”

What Is A Wells Notice? 

For those unaware, a Wells notice is issued by the SEC staff to a company that the regulatory body has been recommended to take enforcement action against a company for possibly violating securities laws. Although it does not represent a formal charge or a lawsuit, in many cases, it can lead to one. It is basically the SEC giving a warning to a particular company that the latter is under strict scrutiny and could be taken to court. 

SEC Butting Head With Coinbase

The Coinbase team reacted to the news by announcing that it would not affect their current products and services, which will continue operating as usual. They have also expressed disappointment that the Wells notice did not provide any specific information about the potential violations of securities law. The team also claims that it had proposed multiple registration options to the SEC across months, which the latter did not respond to. 

The Coinbase statement also notes that it had asked the SEC to identify the specific assets the latter believed to be securities. However, beyond claiming that it has identified some securities violations on the platform, the SEC has refused to reveal further clarification. 

Judges Against SEC

The Coinbase statement also includes a quote from Federal Bankruptcy Judge Michael Wiles, who had called out the regulators over the ongoing Voyager case. 

The judge had said, 

“Regulators themselves cannot seem to agree as to whether cryptocurrencies are commodities that may be subject to regulation by the CFTC, or whether they are securities […] subject to securities laws, or neither, or even on what criteria should be applied in making the decision. This uncertainty has persisted despite the fact that cryptocurrency exchanges have been around for a number of years.” 

Even Judge Analisa Torres, who is presiding over the SEC’s case against Ripple Labs, has reportedly ruled against multiple motions set forth by the regulatory body. Experts believe that the SEC’s claims that XRP is a security hold no ground and will be disproved in the court's final ruling. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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