Coinbase CEO Hits Back At U.S. SEC, Says “Coinbase Does Not List Securities”

Coinbase Global Inc. has issued a formal response to a Wells Notice received from the Securities and Exchange Commission (SEC) on Thursday. The notice was issued to investigate the company's Earn product, wallet service, and exchange operations, prompting Coinbase to assert that it has not violated any securities laws while operating in the United States. The crypto exchange is based in California.

Coinbase Asserts No Rules Were Broken

Coinbase Global Inc.'s CEO, Brian Armstrong, emphasized in a 14-minute video that the company is prepared to defend its position in court against the SEC's investigation into its Earn product, wallet service, and exchange operations. Armstrong also expressed the company's willingness to engage in “true dialogue to a workable path forward” for the broader crypto industry. He criticized the SEC's issuance of a Wells Notice, stating that it is not constructive or beneficial for the country given the lack of a clear regulatory framework.

In response to the SEC's investigation, Coinbase's Chief Legal Officer, Paul Grewal, provided several examples to demonstrate the company's compliance with securities laws. He explained that Coinbase does not list securities, adheres to the SEC's robust process, and rejects over 90% of crypto assets during an internal review before they are listed.

Coinbases Staunch Legal Stance

Attorneys representing Coinbase have responded to the SEC probe with a 73-page document in which they stated that the commission's case against the company would not stand up in court. The brief, filed by Sullivan & Cromwell, was released on Thursday and argued that the commission had no legal basis for its investigation.

The response from Coinbase comes after SEC Chief Gary Gensler warned customers of the risks associated with crypto platforms in a video released earlier this week. The exchange has also filed a petition with a federal court asking the SEC to clarify whether it intends to introduce new regulations for digital assets. The SEC has recently increased its focus on the compliance practices of cryptocurrency platforms and intermediaries.

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