Coinbase disclosed on Wednesday that the company has received a Wells Notice from the Securities and Exchange Commissiona document the agency uses to inform firms they are facing imminent legal action.
The company revealed it received the notice in a 8-K filinga form used by public companies to disclose significant news to shareholdersand in a blog post. In the post, Coinbase said the SEC had issued the Wells Notice over aspects of the Companys exchange, our staking service Coinbase Earn, and Coinbase Wallet after a cursory investigation.
The post added that staff had informed the company of potential securities laws violations but did not provide much specificity. Meanwhile, Coinbase said it does not intend to change how it operates in relation to the notice, while chief legal officer Paul Grewal suggested the company will go to court over the allegations if necessary.
If needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets. Until then, its business as usual, said Grewal.
A person close to Coinbase, speaking on the condition of anonymity due to legal sensitivities, told Fortune the SECs decision to issue the Wells Notice was likely tied to its recent declaration that it was exploring expanding off-shore operations in response to U.S. regulatory pressure, and the company sensed the agency had acted in retaliation.
The person added that the Wells Notice also alleged Coinbase had listed digital assets that could be viewed as unlicensed securities, but did not specify what those assets might be.
In its blog post, Coinbase appeared to defend the integrity of its listing process, noting that it has a rigorous asset review process that rejected more than 90% of assets that apply to be listed on the platform, and that hundreds of assets have been rejected on grounds they may be securities.
This story will be updated with more details shortly.
