Coinbase, a San Francisco-based crypto exchange, publicly disclosed its response to the Wells notice from the US Securities and Exchange Commission (SEC), which it had received back in March. The company argued that the regulator’s enforcement actions were in direct contradiction to the agency’s previous approval of Coinbase’s public listing through its S-1 filing. In response, Coinbase claimed that it is innocent investors who are most likely to suffer from the SEC’s about-face.
Coinbase Reiterates Opposition to SEC’s Wells Notice
On Thursday, Coinbase CEO Brian Armstrong presented the company’s response to the SEC. Coinbase remains in direct opposition to the SEC’s enforcement actions, and its response made it clear that the SEC should have known about Coinbase’s stance when the company went public.
In its response to the SEC, Coinbase highlighted the lack of clear guidelines provided by the regulatory body for its recent enforcement actions. The company argued that if the SEC believed in April 2021 that Coinbase’s core businesses violated securities regulations, it would have been obliged to prevent the S-1 from becoming effective to safeguard the interests of the investing public. Instead, the SEC allowed the offering to proceed, leading millions of members of the public to invest their savings in Coinbase. Investors inferred from the approval that the SEC did not believe Coinbase’s core business was a violation of the law.
Coinbase CEO Reiterates Commitment to Upholding the Law
Armstrong restated Coinbase’s commitment to creating innovative products that promote economic freedom. He stated that the company is committed to building within the US and around the world, and that it would continue to defend itself and stand up for the rule of law.
Coinbase’s response to the Wells notice conveyed confusion regarding the SEC’s abrupt change in attitude, especially considering how engaged the exchange had been with the regulatory body during its public listing process. The response asserted that the staff’s list of proposed charges all rest on three primary legal theories, each of which are flawed and untested.
Coinbase had recently initiated legal proceedings in federal court, demanding that the SEC respond to a petition it filed in July 2022. Similarly, the response to the Wells notice pledged that Coinbase would continue to cooperate with the SEC in hopes of amicably resolving the matter.