As a reminder, Wells’ notice marks the end of the SEC’s investigation into the recipient – in this case cryptocurrency exchange Coinbase. The regulator’s main complaint is about the exchange’s steaming platform, which allows US citizens to earn a certain amount of income in cryptocurrency. Commissioners believe that this is an indication of securities, which means that special registration is required for steaking. In general, there is nothing strange about such a thing, as the SEC is trying to regulate crypto using securities laws that were issued in the first half of the last century. At the same time, the regulator is reluctant to issue new adequate laws, for which it is regularly criticised.

Despite this, Commission chairman Gary Gensler continues to share publications that smear digital assets. In particular, this week he shared investment advice for students. As you can easily guess, one of the items on the list focused on cryptocurrencies, which for some reason should be interacted with very carefully.

Of course, crypto does get volatile at times – and in a negative way at that. However, the same can now be said for common stocks. For example, shares of First Republic Bank are down as much as 95 per cent in 2023, but for some reason Gensler doesn’t focus on their danger.

Coinbase actually already sued the US Securities and Exchange Commission this week. However, it is now also ready to defend itself.

Coinbase’s lawsuit against the SEC

Coinbase became the first publicly traded crypto exchange on Nasdaq in 2021 – one of the main arguments of the trading platform’s representatives against the SEC. That is, since the regulator then allowed the IPO on Nasdaq, it means it has done a thorough due diligence on all the components of the crypto exchange’s business. And since the SEC had no complaints about the Coinbase stacking platform back then, it turns out there shouldn’t be any now.

That’s what the exchange’s official response is about.

If the Commission believed in April 2021 that Coinbase’s core business was in breach of securities laws, it would have been mandated to prevent an S-1 from coming into force to protect investors.

Form S-1 is a document filed to register their securities with the SEC by companies that plan to go public. The S-1 contains basic business and financial information about the issuer with respect to a particular securities offering.

Coinbase has also warned the Commission that the regulator is likely to suffer reputational damage from its strategy, as the SEC could get in trouble with other cryptocurrency companies. Exchange officials once again stressed that the platform does not list securities, its Coinbase Wallet product is not a broker, and the exchange’s staking services do not apply to securities offerings.

Coinbase representatives also said they were ready to go to court. However, they are not counting on such a scenario.

We are ready to defend our position in court, but it should not come to that. We welcome a full-fledged dialogue on the real way forward for our industry.

Here is the relevant video of the response.

Now it’s up to the US Securities and Exchange Commission – Coinbase vice president of litigation Catherine Minarik told Decrypt. She said the regulator has up to six months from the date Wells’ notice was sent to decide whether it will press formal charges in court.

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Meanwhile, SEC chairman Gary Gensler is once again drawing the ire of cryptocurrency fans. This week he posted a four-minute video on Twitter in which he describes cryptocurrencies as “investment contracts” – meaning he still equates crypto with securities.

Gensler’s self-righteousness is particularly evident in the following quote. Here’s the rejoinder that Cointelegraph cites.

The crypto market suffers from regulatory compliance problems. It’s not a lack of regulatory clarity. The law is clear, if you are a securities exchange, clearing house, broker or dealer you have to comply, register with us.

The SEC chief rules out any possible errors in his agency’s policies – on the contrary, he entirely accuses cryptocurrencies of allegedly failing to follow the law. Gensler’s double standard looks particularly egregious against the backdrop of a recent viral video where, in his position as a professor at the Massachusetts Institute of Technology in autumn 2018, he delivers a lecture and emphasises that crypto is not securities.

Earlier, Gensler’s actions were also criticised in the US Congress. Perhaps this will serve as an additional defence for Coinbase in court against the SEC.


The position of Coinbase employees is more than clear: They went public in 2021 after being audited by the SEC. That means if the SEC is not happy with anything now, questions should arise first and foremost to the regulator, which has not fulfilled its obligations in time to the fullest extent. However, taking into account Gary Gensler's present position about crypto, there is no reason to look for logic in the department's actions.


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