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After Coinbase received a Wells Notice, the crypto community rallied behind it.
A Wells Notice refers the formal notification that SEC intends bringing an enforcement action against recipient.
Custodia Bank Founder Caitlin Long said, “every exchange” was sent a Wells Notice in early February, but the actions were not publicly disclosed then.
Citing coordinated enforcements against Paxos and Kraken, she stated U.S. authorities are “absolutely” targeting crypto companies.
“Absolutely, there is no question that they are absolutely going after it.”
Coinbase will fight
Brian Armstrong, Coinbase CEO, posted a response tweet to the matter. He labeled the incident “Part of the journey” to positively change the U.S. financial system.
Moreover, given that Armstrong is confident of the exchange’s compliance, he welcomed the chance to demonstrate that in court.
“We believe that Coinbase and the wider crypto community are correct in law. We welcome the opportunity to present our case before a court.”
He hopes the legal process will shine a light on the SEC being unfair and unreasonable – also illustrating the agency has not “demonstrated a seriousness of purpose when it comes to its engagement on digital assets.”
Reactions from the Crypto community
David MarcusLightspark’s co-founder, Jeremy Lightspark, stated that Coinbase had chosen to follow the rules since its inception and engage with regulators. He was critical of how the establishment treated him and asked why the SEC doesn’t treat shady operations better.
Polygon is co-founder in the same way. Sandeep Nailwal echoed Marcus’ points, saying he finds the situation confusing as Coinbase “The gold standard for compliance.” He signed off by asking, “What’s the deal? [sic] going on over there in US?”
Scott Melker, Host of the Wolf of all Streets Podcast, pointed out that Coiinbase has a “war chest and facts on their side.” He confidently declared the SEC would lose in court.
Do you want CBDC?
As we have already stated, Coinbase is not a good company to enforce. However, Angel Investor @jason This was a power play to stop crypto adoption.
“Ain’t no one in power who would willingly give over their franchise on printing money to… umm… no one!“
VanEck Strategy Advisor Gabor Gurbacs extended this point to say there “is an all out war” against regional banks and crypto. He said this is a “To force compliance, use force” while pointing out that the U.S. recently posted its revised CBDC paper.
Arthur Hayes, former CEO of BitMEX, explained that regional banks are under severe pressure because the Bank Fund Term Program(BFTP) has not yet been announced and will not cover assets held by smaller operators.
“The stress is going to be on any bank that has the majority of its loan book in non-U.S. Treasuries and non-mortgage-backed securities because those are not guaranteed.”
Hayes believes that the Fed will finally back all types of assets, regardless of Gurbacs pessimism toward regional banks.