Coinbase Receives a ‘Wells Notice’ from the SEC: Details
- Paul Grewal, the Chief Legal Officer at Coinbase, confirmed that the exchange has received a “Wells Notice” from the United States SEC.
- The Chief Legal Officer said that the SEC has not given the exchange a lot of information to respond to in the Wells Notice.
- The exchange asked the regulator specifically to identify which assets on the exchange they believe may be securities, and they declined to do so.
- Grewal said that his company met with SEC representatives “more than 30 times over nine months,” but largely did not receive feedback on its proposals.
The largest crypto exchange in the United States, Coinbase, has received a Wells Notice from the United States Securities and Exchange Commission (SEC) amid its plans to expand on a global scale. Interestingly, the agency has recently brought down the regulatory hammer on many crypto exchanges, and it seems that the first exchange to be publicly listed in the United States might be the next target.
According to a blog post authored by Paul Grewal, the Chief Legal Officer at Coinbase, on March 22, the exchange has asked for “reasonable crypto regulations” but instead received “legal threats,” something that was not expected by him. Grewal confirmed that the SEC issued a “Wells notice” to the crypto exchange and suspected that the agency was targeting the company’s staking services.
“We are prepared for this disappointing development. We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets. Rest assured, Coinbase products and services continue to operate as usual – today’s news does not require any changes to our current products or services,” noted Grewal.
It is crucial to note that a “Wells Notice” is a letter that the US securities regulator uses to inform companies of planned enforcement action and the receiver is given a period of close to 30 days to submit a brief and respond to the accusations mentioned in the notice. As reported earlier, the SEC issued such a notice to Paxos as the payment company was responsible for creating and issuing Binance USD, a stablecoin pegged to the US dollar in a 1:1 ratio.
On the other hand, Coinbase has 30 days to submit a response after the regulator’s notice “regarding an undefined portion of our listed digital assets, our staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet after a cursory investigation,” said Grewal.
The Chief Legal Officer said that the SEC has not given the exchange a lot of information to respond to, adding that Coinbase is very disappointed in the agency’s actions. The exchange asked the regulator specifically to identify which assets on the exchange they believe may be securities, and they declined to do so.
Grewal noted that the Wells Notice comes after multiple proposals by Coinbase to the SEC regarding registration, and the regulator did not reply to any of these proposals.
Another important fact here is that the SEC Chair Gary Genslar has often asked crypto companies to come forth to register themselves. However, according to the American exchange, the agency has no plans to register crypto firms, adding that it met with SEC representatives “more than 30 times over nine months” but largely did not receive feedback on its proposals.
“In December 2022, we asked the SEC again for some feedback on our proposals. The SEC staff agreed to provide feedback in January 2023. In January, the day before our scheduled meeting, the SEC canceled on us and told us they would be shifting back to an enforcement investigation. We now understand that there is disagreement within the Commission itself on how to proceed with a registration path. This was just two months ago,” Grewal revealed.
As reported earlier by BitcoinWisdom, the crypto exchange announced that it will expand its services in Brazil and has partnered with Brazilian payment solutions provider Ebanx and the instant payment app operated by the Central Bank of Brazil, Pix. Moreover, it is also testing the usage of the AI chatbot ChatGPT to conduct token security tests.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
