Coinbase Responds To SEC’s Wells Notice, Rejects Rule Breaking Allegation
- Coinbase has formally responded to the Wells Notice issued by the SEC last month.
- CEO Brian Armstrong has urged the regulator to not choose litigation and find a path forward through dialogue.
- Chief Legal Officer Paul Grewal categorically rejected the allegations made by the SEC regarding breach of securities laws.
- The exchange is willing to defend itself vigorously in court if the SEC chooses to litigate.
Coinbase has formally responded to the Wells notice issued by the U.S. Securities and Exchange Commission (SEC). Brian Armstrong, the chief executive of the American crypto giant, has urged the securities regulator to work together to find a path forward through dialogue instead of choosing to litigate. Chief Legal Officer Paul Grewal reiterated that the crypto exchange does not list securities.
Coinbase Will Defend Itself Vigorously In Litigation
Coinbase submitted its response to the SEC in the form of a video and a 73-page document. The Wells notice was issued by the regulator to allow the exchange to offer its explanation for the allegations of securities law violations. In the response, Chief Legal Officer Paul Grewal categorically rejected the allegations made by the regulator. He also stressed on the fact that the exchange’s fundamental business hadn’t changed since 2021 when the SEC reviewed it before allowing the company to become publicly listed.
Grewal also questioned the basis on which the securities regulator asserted jurisdiction over the crypto exchange, given that SEC Chair Gary Gensler himself testified in 2021 that his agency did not have regulatory authority over crypto exchanges. The Chief Legal Officer highlighted that since Congress had introduced no new legislation between the testimony and the Wells notice, there was no basis for the SEC to claim jurisdiction and charge Coinbase.
A Wells notice to the company at this stage is not constructive and its not in America’s interest. There are many aspects of the current rules which are not clear for operating a crypto business in the U.S.”
Both executives made it clear that the company is prepared to defend itself vigorously in court if the SEC chooses to go the litigation path. CEO Brian Armstrong warned that litigation would put the agency’s own actions on trial. The executives agreed that the constructive solution would be to address all regulatory concerns through dialogue in order to find a path forward.
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