On Wednesday this week, Leading cryptocurrency exchange Coinbase(CB) reported that the US Securities and Exchange Commission (SEC) had sent it a Wells notice, indicating that the regulatory agency may soon take enforcement action against them.
For context, a wells notice is a document that the SEC uses to inform firms that they may soon be facing legal action.
This notice came after a short investigation into unidentified digital assets offered on Coinbase and its staking services Coinbase Earn, Coinbase Prime, and Coinbase Wallet, according to a blog post published by Coinbase earlier today.
As the SEC is known for doing, Coinbase mentioned that the agency has not provided enough details on the alleged offences, and the assets that it had classified as securities, before serving up the Wells notice.
According to reports, the SEC has also repeatedly rejected Coinbase's requests to register with them despite the crypto exchange's repeated requests.
"The SEC has specifically refused Coinbase's requests to disclose the assets on our platforms that they feel could be securities", said Coinbase chief legal officer Paul Grewal."
According to the exchange's chief legal officer, however, the SEC rejected more than 30 requests over the course of nine months, which is why Wednesday's Wells notice was issued.
Grewal also mentioned that if needed, Coinbase is ready to welcome legal action to provide the clarity it has been advocating for in this situation.
The SEC, according to Grewal, "has not been fair or reasonable when it comes to its engagement on digital assets".
In all, Coinbase maintains that it does not list securities on its platform and that each digital asset is thoroughly examined and reviewed before being listed.
In fact, it seems that more than 90% of the assets that Coinbase reviews are ultimately rejected because they don't match the company's requirements.
This is not the first encounter between both parties.
The SEC was presented with Coinbase's staking services for the first time in 2019 and again in 2020, but remained mute until the most recent probe, according to Coinbase.
The exchange maintains that under any legal criterion, including the Howey test, its staking services are not securities.
Overall, the war between the SEC and any company they deem to be involved in the sale of securities has been a very muddy one.
The agency has sometimes mentioned that cryptocurrencies in general, asides from bitcoin may fall under the "securities" category.
Through the years, under the leadership of its current chairperson, Gary Gensler, the SEC has gone after companies like Ripple, Kraken, Ethereum and now Coinbase.
Kraken on one hand, has agreed to shut down its staking service in the US and pay a $30 million fine, while Ripple on the other hand, is expecting a ruling on its summary judgement with the agency, over its sale of XRP tokens.
Wednesday's events only show that the prolonged dispute between Coinbase and the SEC is starting to heat up.
Coinbase's CEO, Brian Armstrong, has long been a vocal critic of the SEC, for the agency's failure to provide clear guidance on the laws surrounding digital assets and for acting dishonestly when dealing with crypto firms.
In a lengthy Twitter thread in September 2021, Armstrong accused the SEC of engaging in "some really sketchy behaviour."
The stocks of several top companies appear to generally be in the red as seen below.
In response to the SEC versus Coinbase tussle, the share price of Coinbase's stock: Coinbase Global inc plummeted especially harder than most of the others, by a whole 8.16% on March 23.
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