Crypto exchange Coinbase offered a fiery response on Thursday to last month’s Wells notice from the Securities and Exchange Commission, telling the federal regulator that an enforcement action against the crypto exchange would pose “major programmatic risks” to the SEC that would “fail on the merits.”
“Coinbase does not list, clear, or effect trading in securities,” the company’s response said. The analysis SEC staffers did to justify an enforcement action “appears to rest on superficial and incorrect analogies to products and services offered by others,” Coinbase wrote in a blog post from chief legal officer Paul Grewal.
Separately, Grewal told CNBC, “At the time when we went public we had detailed discussions with the SEC about the very aspects of our business that are now — two years later — the subject of the Wells notice. Nothing has changed.”
The SEC indicated to Coinbase in the Wells notice in March that its spot trading, staking, custody and institutional trading businesses were at risk. The SEC’s warning to Coinbase noted that the regulator would allege Coinbase was offering and selling unregistered securities, in violation of federal law. The SEC has used unregistered offering and sale violations to force other crypto exchanges to close services in the U.S., including the crypto exchange Kraken’s staking-as-a-service product.
If the SEC succeeded, it could force Coinbase to close down those units. To date, the SEC has never approved a crypto-asset entity as a national securities exchange, despite an extensive dialogue with Coinbase over the years.
Executives at the crypto firm have signaled for months that Coinbase is ready to grapple with the SEC in an existential case not just for Coinbase but the future of the crypto industry in the U.S. at large.
Coinbase noted that the company’s yearslong efforts to cooperate with SEC securities staff produced no concerns from SEC staffers until recently. Coinbase also noted that the SEC could have denied the…
Read the full article here