SEC Plans Lawsuit Against U.S. Crypto Exchange Coinbase

The US Securities and Exchange Commission issued a warning against the crypto group Coinbase on Wednesday, March 22. The company is to face civil actions over some of its products.

The warning

Coinbase reported receiving a letter from the SEC called the Wells notice, in which authorities expressed their concern that certain entities or people may have broken the law on investor protection. An SEC Wells Notice informs a corporation that the agency plans to take enforcement action against them. Because the agency’s commissioners must approve any legal actions or enforcement agreements, the notices are not final.

As per The Wall Street Journal reports, the SEC is targeting one of the biggest names in cryptocurrency by threatening Coinbase with legal action. Coinbase is a publicly listed business that has assisted in bringing tens of millions of users into the digital currency markets since its launch in 2012.

Cause of the issuance of Wells Notice

According to the company’s blog post, the SEC inquiry that Coinbase reported last summer was the catalyst for the Wells notice. Coinbase said that it met with the SEC staff more than 30 times to work out a method to get registered and sought to ease the agency’s suspicions by registering a portion of its company with the SEC. Even so, Coinbase said that the SEC postponed a meeting with the business in January and announced that it would return to enforcement action.

In April 2021, Coinbase went public on Nasdaq Inc., sparking a significant rise in the price of bitcoin and appearing to be a vast mainstream endorsement of cryptocurrencies. In a blog post published on Wednesday, the company emphasized that the SEC had approved its registration statement at the time and that its staking and exchange operations had mainly stayed the same.

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