- U.S. SEC issued a Wells notice to Coinbase on Wednesday.
- Coinbase chief legal officer Paul Grewal’s remarks in response.
- Coinbase stock slipped more than 10% in extended hours.
Coinbase Global Inc (NASDAQ: COIN) is trading over 10% down in extended hours after receiving a “Wells notice” from the SEC for potentially violating U.S. securities laws.
Here’s what we know so far
Remember that such a notice often signals the agency’s intent to formally press charges.
Still, Coinbase says the Wells notice does not provide enough information on potential violations and so it will stick to regular operations for now.
The company believes these potential enforcement actions would relate to aspects of the Company’s spot market, staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet.
Last month, the Securities and Exchange Commission had issued a similar notice to Paxos (blockchain infrastructure platform) as well.
Chief legal officer Grewal’s remarks
The news arrives about a month after Coinbase reported its financial results for the fourth quarter that topped Street estimates.
On Wednesday, its Chief Legal Officer Paul Grewal reiterated that the company does not list securities. Speaking with CNBC, he also said:
If needed, we welcome a legal process to provide clarity we’ve been advocating for and to demonstrate that SEC simply has not been fair when it comes to its engagement on digital assets.
Grewal also maintained that Coinbase Earn is significantly different from staking services by Kraken that the SEC banned last month. Coinbase stock is still up 100% for the year at writing.