The Securities and Exchange Commission (SEC) is prepping for official enforcement action against Coinbase – America’s largest cryptocurrency exchange – for selling unregistered securities. 

The agency issued a Wells Notice against the exchange on Wednesday, following a slew of other investigations and lawsuits launched against Coinbase’s competitors in recent months. 

Coinbase VS SEC

In an SEC filing, Coinbase explained that the Wells Notice warned of violations of Federal Securities Laws, including the Securities Exchange Act of 1934 and  Securities Act of 1933.

Based on discussions with SEC staff, the company believes the SEC is taking issue with Coinbase’s primary spot exchange business, its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. 

Though a Wells Notice is not a guarantee of a lawsuit, it is a likely indicator of one, which may seek “injunctive relief, disgorgement, and civil penalties.” Paxos, the issuer behind the BUSD stablecoin, was issued a Wells Notice by the SEC for securities law violations last month, which the parties are still working out. 

The SEC has warned Coinbase about other intended products in the past, investigated the firm about its listing process, and fined rival exchange Kraken for offering a nearly identical crypto staking service. As such, Coinbase said its been prepared to face legal action from the agency, and even welcomes it.

“While we understand that this is all part of the journey to reforming our financial system, we are right on the law, confident in the facts, and welcome the opportunity for Coin