Cryptocurrencies receive a new onslaught from regulators. This time, the US Securities and Exchange Commission (SEC) sent a Wells notification to Coinbase that they must respond to in the coming days.
The cryptocurrencies receive a new onslaught from regulators. This time, the US Securities and Exchange Commission (SEC) sent a Wells notice to Coinbase informing the exchange that it is considering taking legal action for possible violation of federal securities market laws. After learning the news, the stock plunges 12% in premarket on Wall Street.
According to a statement from the cryptocurrency company, the notification refers to “an undefined portion of our listed digital assets”, as well as its betting service (‘staking’) Coinbase Earn, Coinbase Prime and Coinbase Wallet. Coinbase’s director of regulatory compliance, Paul Grewal, has assured that they trust the legality of their assets and services and has indicated that “we would welcome a legal process to provide the clarity for which we have been advocating and to show that the SEC simply hasn’t been fair or reasonable when it comes to its commitment to digital assets.”
What is a Wells notification?
The Wells notice is a type of document that the agency uses to inform companies and individuals of possible regulatory action against them. It typically lays out the framework of the regulatory argument and offers potential defendants an opportunity to rebut the SEC’s allegations. The name derives from the SEC’s Wells Committee, which proposed this process in 1972, and is named after John A. Wells, its chairman. After receiving a Wells notice, the accused party has 30 days to respond to it and argue why charges should not be filed against them.
It is not the first time that Coinbase has come under the scrutiny of the SEC. Last summer, the company itself said it received investigative subpoenas and requests from the SEC to obtain “documents and information regarding certain existing and anticipated future customer, transaction and product programs.”
Criticism of regulators
The CEO and co-founder of the exchange, Brian Armstrong, charged the regulator in a series of tweets in which he indicated that the SEC “it has simply not been fair, reasonable or even serious in its commitment to digital assets.” “Going forward, the legal process will provide an open and public forum before an impartial body where we can make it clear for all to see,” he added.
In recent weeks, Armstrong has defended the company’s staking services, assuring that they are not “monolithic” and that their offering is fundamentally different from that of Kraken, another crypto exchange that was fined $30 million. for offering these same types of services.
For his part, Jake Chervinsky, head of regulation at the Blockchain Association, stressed that Coinbase “has invested an extraordinary amount of time and resources working in good faith to seek regulatory clarity from the SEC.” “The idea of them being rewarded with nothing more than a tip from Wells is sad, but not surprising from an agency better known for regulating through law enforcement.” Indian.
Source: Ambito
