Coinbase Global (COIN) said in a regulation Filing Wells received notice from the Securities and Exchange Commission on Wednesday that SEC staff had made a “preliminary determination” to recommend enforcement action against the largest US crypto exchange for violating federal securities laws.
Coinbase shares fell 8% after hours of their losses through Wednesday. The stock has more than doubled since early January, but is still down 56% from a year ago. It closed at $77 a share on Wednesday.
Coinbase said in its filing that any activity related to specific crypto assets listed on the platform would involve features of the exchange’s spot market, staking service, prime and wallet services. A potential civil action from the SEC may seek “injunctive relief, disgorgement and civil penalties.”
A Wells Notice informs a company or individual of the completion of investigations where a regulator has found violations of the Act. Recipients of such notices must respond within 30 days with a legal brief.
Coinbase did not respond to a request for comment, but published a blog post saying the company is ready to fight when its filing becomes available.
“We are confident in the legality of our assets and services, and we welcome a legal process to provide the clarity we advocate, if necessary, and demonstrate that the SEC is fair or unfair when it comes to its involvement in digital assets,” Paul Grewal, Coinbase’s chief legal officer, said in a blog post.
Coinbase’s filing follows a string of SEC enforcement actions and several Wells notices sent to crypto companies in recent weeks. There are several cases involving the collapse of crypto exchange FTX.
Since early January, the SEC has taken 11 enforcement actions against crypto companies and individuals. One Crypto entrepreneur Justin Sun vs. from Wednesday.
The SEC settled charges against Kraken, the second largest crypto exchange, for selling unregistered securities through its crypto staking scheme. Coinbase also has a staking program with different terms than Kraken, and Yahoo Finance has told Yahoo Finance that it will take any action against the service.
SEC Chairman Gary Gensler has called for crypto exchanges to register with the agency, but Coinbase Chief Policy Officer Faryar Shirzad told Yahoo Finance last Friday that there was “no way” to do so.
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