Coinbase Pushes Back Against Potential SEC Legal Action

investopedia.com:

America's largest crypto exchange claims the Securities and Exchange Commission (SEC) is pressuring it to overhaul its entire customer-facing operation.

Coinbase Global Inc. (COIN) pushed back against the regulator Thursday, making public its response to a Wells Notice the company received late last month. The Wells Notice signaled that the SEC could take legal action against Coinbase for violating securities law.

The SEC argues Coinbase's tokens and other products are securities that should be registered. Coinbase disagrees, claiming none of its current products are securities.

«A Wells Notice—at this stage, when there's not a clear rulebook—is not constructive and it's not good for America,» CEO Brian Armstrong said in a video. «We are prepared to defend that position in court, but it doesn't have to come to that.»

Coinbase claims the SEC hasn't uncovered new information about the company, and said any concerns should have been brought up when the company filed its public offering process.

«Coinbase has been talking to the SEC for many years now. We have repeatedly asked the SEC for its own views on how securities laws might apply to Coinbase and our industry,» said Paul Grewal, Chief Legal Officer of Coinbase in the video, «And to be candid, we have mostly gotten silence in response.»

The SEC could sue Coinbase on the basis of the Wells Notice, and the company said while it's prepared to defend itself, a lawsuit may not be in the regulator's best interest.

«Coinbase has never wanted to litigate with the Commission. The Commission should not want to litigate either,» Coinbase said. «Litigation will put the Commission’s own actions on trial, erode public trust cultivated over decades, undermine incentives for market