The U.S. Security & Exchange Commission – (SEC), issued the crypto exchange Coinbase with a ‘Wells’ notice, warning the exchange that it identified potential violations of U.S. securities law.
A ‘Wells’ notice is one of the final steps taken before the SEC formally issues charges. It lays out the framework of the regulatory argument and offers the ‘target’ an opportunity to challenge the SEC’s claims.
Coinbase shares drop
Coinbase shares fell after hours by nearly 12% upon this news on adding to an 8% drop during standard trading hours.
The SEC has ramped up its enforcement of the crypto industry, bearing down on such projects and companies.
Months before the collapse of FTX in November 2022, crypto markets were seriously spooked by rising interest rates and by a general move out of risk, which contributed to the collapse of stablecoin Terra and the demise of crypto hedge fund Three Arrows Capital and exchanges Celsius and Voyager.
The SEC is increasing pressure on crypto companies in recent months – and this is likely to continue to gain momentum as the crypto industry moves ever closer to greater regulation.