SEC Warns It May Be About to Sue Coinbase as Shares Dip 20%

The US financial regulator (SEC) has formally warned Coinbase that it may be about to sue the cryptocurrency trading platform, considering that certain virtual assets should be registered because it considers them to be true and proper securities, as is the case of shares.

The news was given by the CEO of the platform, Brian Armstrong, on his official Twitter page.

“Today Coinbase received a note “‘Wells’ from Coinbase focused on staking and listed assets”, i.e. a warning that usually tends to be followed (but not necessarily) by an enforcement action proposed by the supervisor.

1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.

— Brian Armstrong (@brian_armstrong) March 22, 2023

The platform publication indicates that it believes this notice is related to “aspects related to the Coinbase Earn, Coinbase Prime and Coinbase Wallet segments”.

In an official statement, Paul Grewal, legal director of Coinbase, stresses that “if necessary, we welcome a lawsuit that will serve to clarify what we have defended and demonstrate that the SEC has not been reasonable or fair when it comes to crypto assets “.

“Until then [este tema] is ‘business as usual'”, that is, it is a normal theme in the life of the company.

A source familiar with the matter explained to the news website CoinDesk that the ‘exchange’ had “60 different conversations with the federal regulator about issues related to the registration and listing of assets”.

The site adds that the agency refused to give advice or answers on this matter.

In August, the SEC had already informed that it was investigating whether securities are among the portfolio of 150 virtual assets made available by the largest US crypto platform to its clients.

Coinbase has had an uneasy relationship with the US regulator. In another investigation against a Coinbase employee – accused of sharing privileged information with a brother and a friend – the SEC had already concluded that nine digital assets were securities.

Suspicions about false “tokens” increase as the market witnesses the growing birth of virtual assets correlated with others (the “stablecoins”) or with characteristics similar to traditional assets (such as the distribution of dividends in the case of “security tokens”) .

In Portugal, where investors can access an “exchange” page in Portuguese, despite the fact that it is not registered with the Bank of Portugal or the CMVM, the regulator led by Luís Laginha de Sousa assured Negócios in the summer of last year who was following, from a supervisory perspective, the Coinbase issue.

At the time, the CMVM also added that it was “attentive to a potential final decision by the SEC” and that “it will also act, whenever possible, in conjunction with other European supervisors, in this case at the level of the European Securities and Markets Authority (YOU ARE BAD)”.

After this news, Coinbase shares started the session sinking 20.27%, a drop the likes of which had not been seen since last June 13, having in the meantime eased to a fall of 9.48% to 69.5095 dollars.

Bitcoin: is it a stock, or a barrel of oil?

In the US, the discussion about the nature of crypto assets went beyond university banks, generating a trench war between platforms and the SEC.

On the regulator’s side, the chairman of the SEC, Gary Gensler, considers that cryptocurrencies have the same nature as securities, so they should be registered and supervised directly by the SEC.

On the market side, the dominant opinions are divided between considering crypto-assets as a unique nature, or comparing them to raw materials, as is the case of oil.

More recently, the co-founder of the ethereum blockchain network, Joseph Lubin, defended that he is “quite confident” that ether is not a stock, more like a “commodity”, as is for example oil.