Recently, SEC issued a Wells notice against Coinbase over some of their crypto exchange’s products. This notice will allow the US SEC to bring enforcement actions against Coinbase. As soon as the company revealed this information, their stock prices dropped by more than 12 per cent to 67.33 USD in extended trading.
US SEC threatened to sue Coinbase
On Wednesday, Coinbase, the biggest crypto exchange in the US, received a Wells notice from the US SEC for some of their crypto exchange’s products. It means the exchange could face civil action over some of its products. Shares of the coinbase dropped nearly 13 per cent to 67.33 dollars in extended trading after the company said on Wednesday that the regulator had issued it Wells Notice.
A Wells Notice is a formal notice or declaration issued by regulators to inform individuals or companies of completed investigations where infractions have been discovered. It usually takes the form of a letter, which notifies the recipient of the board nature of the violations uncovered and the nature of enforcement proceedings to be initiated against the recipient. The company said the potential enforcement actions would be tied to aspects of Coinbase’s spot markets as well as its Earn, Prime and Wallet products.
The US SEC has been ratcheting up efforts to crack down on the crypto market since the failure of FTX last year, and staking services like Coinbase’s Earn are under increased scrutiny for not being registered. Staking is a process in which the crypto holders volunteer to validate transactions on the blockchain network. These products often offer customers eye-popping yields.
Kraken shut down its operation last month
As you know, SEC issued a Wells notice against Coinbase $COIN over some of their crypto exchange’s products. Last month, a similar case happened with Kraken, and it agreed to shut down its US crypto staking services and pay 30 million USD in penalties to settle US SEC charges that it failed to register the program.
However, Coinvase said its services continued to operate as usual after the notice was issued, as the Wells Notice does not always result in charges or signal that the recipient has violated any law.
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Also Read: Texas introduces new law to protect miners and hodlers.
