Coinbase CEO Reacts To SEC's Warning Over Potential Securities Law Violations

Brian Armstrong, the co-founder and current CEO of Coinbase, an American publicly listed company that operates a centralized cryptocurrency exchange platform, shared his views on the recent warning sent to the crypto company by the U.S. Securities and Exchange Commission (SEC) over potential securities law violations.

Armstrong confirmed that Coinbase received a Wells notice from the U.S. financial regulator which centers on the company's staking and asset listing and claimed that the company is prepared to appear before the court defending its name and reputation. "We are right on the law, confident in the facts," he said.

"Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action," Armstrong stated in a Twitter thread.

"Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have applied to be listed on the platform," he added.

The executive further said that "two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have applied to be listed on the platform."

"We are proud to stand up for our customers and the industry in these moments," Armstrong added.

For Armstrong, "the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on."

The CEO also assured its clients and customers that while Coinbase is under scrutiny by the financial regulator, it will still keep on doing what it does best, and that is, building the "most trusted products and services" to "update the financial system" and create "more economic freedom in the world."

The industry garnered mixed reactions when news of Coinbase receiving a Wells notice from the SEC broke out.

Custodia Bank founder and CEO Caitlin Long said the move was a "crystal clear" message underlining that "the Biden Administration wants all crypto — even the legit parts of it — run out of the U.S," adding that the previous day's White House economic report "dunked on all financial innovation while espousing the 'stability' of traditional banks."

Coinbase Chief Legal Officer Paul Grewal said that "Coinbase received a Wells notice from the SEC. After years of asking for reasonable crypto rules, we're disappointed that the SEC is considering courts over constructive dialogue. But if courts are required, so be it. We'll defend the rule of law."

Although many criticized the SEC for its most recent move against a crypto company, others took the chance to gloat and hit Coinbase back.

"I have zero empathy for Coinbase. They had the chance to stand with Ripple, but chose to delist #XRP thinking they would get favorable treatment," a Twitter user who goes by the handle @Cryptobull2020 tweeted.