Coinbase Shares Plunge as SEC Sends Warning
Coinbase, the popular cryptocurrency exchange, saw its shares fall by as much as 20% in early trading on Thursday after the US Securities and Exchange Commission (SEC) issued the company a Wells notice.
SEC Warning
The Wells notice informs companies that they may be in violation of securities laws and that future enforcement action may be taken against them. Coinbase, in a filing with the SEC, stated that any action “would relate to aspects of the company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet.” The SEC has been critical of the cryptocurrency industry and has often accused companies of selling unregistered securities.
Downgraded Shares and Rebuttal Deadline
Ahead of the market open, Oppenheimer analyst Owen Lau downgraded Coinbase’s shares from outperform to perform following the SEC’s Wells notice. The analyst cited Tuesday’s Economic Report of the President, which was highly critical of the crypto industry. Coinbase has until March 29 to decide whether it intends to rebut the agency’s findings. While Wells notices don’t always lead to enforcement actions, they are often seen as a warning sign for investors.
Tron Founder and Unregistered Securities
On the same day that Coinbase received the Wells notice, the SEC also sued Tron founder Justin Sun for the sale of unregistered securities among other charges. The move highlights the agency’s continued focus on enforcing securities laws within the cryptocurrency industry.
Source: CoinDesk
