Coinbase and SEC Lock Horns Over Alleged Securities Law Breaches
Coinbase, a major cryptocurrency exchange, has been informed by the Securities and Exchange Commission (SEC) that it is under investigation for potential violations of securities laws related to its exchange, staking service, Coinbase Earn, and Coinbase Wallet.
The company confirmed the receipt of a Wells Notice and stated that it would continue to operate its services as usual. The notice does not imply any conclusion or foregone action.
Coinbase’s Chief Legal Officer expressed disappointment but said that the company is confident in the legality of its assets and services.
The SEC has been increasingly scrutinizing staking and other products offered by crypto firms, with rival exchange Kraken recently settling a case and paying a $30 million fine.
Coinbase has stated that its staking activity does not violate U.S. securities law.
Additionally, former Coinbase product manager Ishan Wahi has pled guilty to wire fraud-related charges, leading to ongoing civil litigation related to the registration of tokens.
Coinbase’s stock dropped over 11% in after-hours trading after the news broke.