Cryptocurrency exchange Coinbase disclosed on March 22 via a blog post that it received a Wells notice from the United States Securities and Exchange Commission (SEC), relating to regulators taking enforcement action.
Coinbase explained that the legal threat could lead to sanctions on the exchange’s staking program, Coinbase Earn; listed digital assets and wallets; Coinbase Prime Services.
It should be noted that a Wells notice letter contains a warning that is usually followed with an enforcement action. Meanwhile, Coinbase did not provide comprehensive details of the letter apart from possible violations of securities laws.
However, Coinbase chief legal officer Paul Grewal argued that the crypto exchange requested SEC to identify the specific assets on its platforms that may be classified as securities but it was declined.
He further added that Coinbase has submitted multiple proposals to the SEC concerning registration in a couple of months but there was no response until recently when they issued a Wells letter.
Coinbase exchange maintained that its products and services would continue to operate as usual pending the time that investigation would be concluded.
It would be recalled that Coinbase submitted a petition to the SEC on March 20 in a bid to explain to the regulator that staking might not necessarily be universally classified as a security.
Coinbase CEO Describes SEC as a ‘Novice’
In light of the new developments, Coinbase CEO Brian Armstrong described the United States Securities and Exchange Commission (SEC) as a “soccer refs” in a game of pickleball, which invariably means a novice.
Armstrong made reference to a situation back in April 2021 in which the SEC approved Coinbase’s application to go public. He maintained that SEC cleared all its asset listing then with 57 references to staking.
On the contrary, the SEC seems to be holding a different position. To this end, Coinbase Chief Legal Officer Paul Grewal remarked that the SEC has had no clear rule book on crypto regulation from time immemorial.
Meanwhile, Armstrong has repeatedly criticized the SEC for outright lack of clarity over cryptocurrency regulation, stressing that it has become the major problem affecting the crypto industry.
