Coinbase's Response to the SEC Wells Notice
Last month, the SEC sent Coinbase Wells notice. On Arpil 27, Coinbase shared a copy of its response to that SEC’s Wells notice.
The Coinbase response notes that back in April 2021, the SEC declared Coinbase Global, Inc.'s registration statement effective, allowing its shares to be sold to investors. Coinbase observers that in May of 2021, the SEC Chair stated that the commission lacked the authority to regulate businesses like Coinbase. Coinbase maintains that the SEC also later claimed that they had enough authority to require crypto companies to register as national securities exchanges. Coinbase maintains that despite the same facts being available for years, the SEC only elected recently to initiate possible litigation against Coinbase.
Coinbase maintains in its response that this move by the SEC could very will put it's own practices on trial and possibly even erode public trust in the Commission. Coinbase maintains it has consistently engaged with the SEC and sought clarity on registration and compliance matters. They further allege that the SEC's legal theories in its potential charges against Coinbase are untested and flawed.
Coinbase further warns that outcome of such potential litigation could have far-reaching consequences for the SEC's authority over novel products and markets. Instead of litigation, Coinbase submits that the the SEC could instead seek additional authority from Congress, initiate rulemaking processes, or engage in dialogue with Coinbase.
The Commission’s case against Coinbase will fail as a matter of fact and law. Litigation will also expose the deep inequities present in the Commission’s dealings with Coinbase, subject the Commission to far-reaching programmatic risk, and, ultimately, harm investors, markets, and market participants in both traditional and digital assets. These risks can be avoided.
Coinbase remains ready, willing, and eager to engage collaboratively with the Commission on charting a path forward toward registration and regulation of digital asset securities markets. But it cannot do so without reciprocal engagement from the Commission, and litigation will decimate those efforts. Coinbase Wells Response
This blog post was prepared with the assistance of ChatGPT-4 AI. Nothing in this post should be considered legal advice or the creation of an attorney-client relationship. This blog is strictly for informational purposes only.