In this illustration, the Coinbase logo is displayed on a smartphone screen.
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The Securities and Exchange Commission has issued a cryptocurrency exchange Coinbase a notice from Wells, warning the company that it had identified a potential violation of U.S. securities laws.
“Based on discussions with Employees, the Company believes these potential enforcement actions will involve aspects of the Company’s spot markets, Coinbase Earn, Coinbase Prime, and Coinbase staking services. Wallet,” Coinbase said in a regulatory filing. “Potential civil actions could seek relief by order, dissent, and civil penalties.”
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Wells’ announcement is usually one of the final steps before the SEC formally sets out the fees. It often lays out the framework of the legal argument and gives potentially charged people the opportunity to refute the SEC’s claims.
Coinbase described the investigation as a “skimming” and said Wells’ announcement provided relatively little information about potential breaches.
The company said that until any legal process is resolved, the exchange’s services will continue to operate as normal.
Coinbase executives, including founder and CEO Brian Armstrong, have pushed back against the SEC’s claim that they are overreaching, which has been aggressive against the crypto industry. since the collapse of FTX in November. At the direction of SEC chairman Gary Gensler, the regulator issued enforcement actions against many heavyweights, including GeminiGenesis, CEO of TRON Justin Sun, Do Kwonand cryptocurrency exchange Kraken.
“We have prepared for this disappointing outcome and are confident in the legitimacy of our assets and services,” Coinbase Chief Legal Officer Paul Grewal said in a statement to CNBC. “If necessary, we welcome a legal process to provide the clarity we have advocated and to demonstrate that the SEC is simply not fair or reasonable when it comes to digital assets. .”
The SEC sent a Wells notice to stablecoin issuer Paxos in February. “We will engage with SEC staff on this matter and stand ready to litigate vigorously if necessary,” a Paxos spokesperson told CNBC at the time.
