- The SEC issued Enforcement Notice to Coinbase regarding unregistered Securities.
Coinbase might soon face enforcement action regarding unregistered securities, causing its shares to plummet by 15%. The crypto exchange said on Wednesday, March 22, 2023, that the SEC has alleged that Coinbase might be violating securities laws in their exchange’s staking services.
The Wells Notice By the SEC
US financial regulator Securities and Exchange Commission (SEC), has targeted Brian Armstrong’s crypto exchange Coinbase with a Wells notice. This notice suggests that the agency is planning enforcement action action in the future, which could include either an injunction or cease-and-desist, without any specification of exactly which activities were found violating laws.
However, issuing a Wells notice does not mean doom for the exchange. Coinbase has a time limit till March 29, to argue the allegation of selling unregistered securities.
The company feels that the supposed enforcement actions would be targeting the company’s Coinbase Earn staking services, Coinbase Wallet and Coinbase Prime. The company argued in a blog on Wednesday, saying the digital asset listing processes are not subject to the notice.
The Securities and Exchange Commission and Coinbase
An anonymous person familiar with the whole issue told the media that Coinbase had more than 60 interactions with the SEC regarding registering and listing digital assets. Still, the agency declined to offer advice or hear answers to questions. The main issues discussed in these meetings defined the correct market structure and confirmation of the coins to be listed.
On many occasions, Coinbase has openly denounced the SEC over its vague regulatory structures. While the SEC chair, Gary Gensler, said multiple times that crypto exchanges, including Coinbase, are working as unregistered securities exchanges in the country, arguing that many tokens listed on the exchange closely resemble securities and must be subject to the same laws.
Coinbase Global (COIN stock) – After Effects of Wells Notice
Due to these allegations, the already suffering COIN stock dropped by almost 15 points and registered an almost 20% drop. When writing, it gained a bit to trade at $69.82, dropping 9.49%. Previous close and open were at $77.14 and $61.85, respectively. In comparison, the fifty-two-week change was a drop of 59.44%.
Before the report, COIN was relatively bullish, hovering above the upward-sloping trend line. It even crossed the immediate resistance at the $73.51 mark and was close to addressing R1. But a negative sentiment pulled it down, and now it is touching the moving average.
However, Coinbase’s statements and the March 29 deadline should leave room for the creation of positive sentiments. However, it might touch or even cross the immediate support at the $51.40 mark. It might bounce back from here or consolidate between the two until the dust settles on the Wells notice.
The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
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