- The SEC finds breaches of the securities laws against Coinbase.
- Coinbase share falls over 8%.
The largest crypto exchange Coinbase Global reported receiving a “Wells Notice” from the Securities and Exchange Commission. Alerts Coinbase that the SEC staff has made a “preliminary determination” to recommend an enforcement action against the cryptocurrency exchange for breaking federal securities laws.
According to a regulatory filing on Wednesday, the securities watchdog intends to bring an enforcement action against one of the largest cryptocurrency exchanges in the United States. This is the most recent development in a protracted dispute between the watchdog and the digital asset.
In response to this, Coinbase claims in a recent blog post that, they asked the SEC for reasonable crypto rules for Americans. But instead of this, the exchange received “legal threats.”
Coinbase Shares Dropped
Since the start of the year, SEC enforcement proceedings have spiked. Also, the SEC settlement with Coinbase’s rival Kraken and a Wells notice to Paxos, alleging that the Binance USD stablecoin it distributes is unregistered security, have alarmed the cryptocurrency industry.
Coinbase’s exchange, Coinbase Earn, Coinbase Wallet, and its staking service are all affected by the so-called Wells notice. Following the filling, Shares of Coinbase dropped by 8% today after dropping by the same amount on Wednesday, despite more than doubling since the start of January. The stock is still down 56% from a year ago. On Wednesday, it finished at $77 per share.
However, this is not the first time the SEC has sent a Wells notice to Coinbase. In 2021, the SEC issued a warning to the company. Stating that the proposed “Lend” product, which would have let customers earn interest by lending out their crypto holdings. Later the launch was canceled by the exchange.
Moreover, not every potential problem mentioned in the notice has to be addressed in a final action. After the notice was issued, Coinbase did not respond to a request for comment, but it said its services continued to operate as usual.
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