Coinbase Submits Response to SEC Wells Notice

Coinbase, a leading cryptocurrency exchange, has pledged to collaborate with regulators to ensure the crypto industry is safe and trusted. The company made this commitment in a written submission and video addressed to the Securities and Exchange Commission (SEC), which it shared online on April 27. The move was in response to a Wells notice that Coinbase CEO Brian Armstrong announced in March the company received from the SEC.

A Wells notice is not a formal charge or lawsuit but can often lead to them. It is a letter that informs individuals or firms that the SEC is planning to bring enforcement action against them.

Coinbase’s Response to the Wells Notice

In the video posted on April 27, Armstrong assured the SEC that Coinbase is committed to working within the regulatory perimeter and desires a clear market structure for trading crypto securities. He added that not all crypto assets are securities, as there are also crypto commodities, stablecoins, and non-fungible tokens (NFTs). Armstrong emphasized that the company is willing to work with multiple regulators to make the industry safe and trusted, and a Wells notice at this stage is not constructive.

The SEC spokesperson declined to comment on the existence or nonexistence of any investigation, saying that the SEC generally does not acknowledge any investigation until charges are filed.

Company’s Sues the SEC

As we reported on Zatrun.com, Coinbase filed a federal court action on April 24 asking the SEC to release its response to a petition from last year asking the SEC to “propose and adopt rules to govern the regulation” of digital assets. The move comes three days before the release of the video.

In the Thursday video, Coinbase Chief Legal Officer Paul Grewal said Coinbase, and the SEC are on “on the brink of a fight that doesn’t need to happen.” Grewal emphasized that at a time when they could be working together to provide clarity and stability to an important new industry for consumers and investors, they are instead gearing up for litigation.