Why Coinbase Stock Is Tumbling Today

Coinbase Global Inc COIN shares are trading lower Thursday morning after the company received a Wells Notice from the U.S. Securities and Exchange Commission.

What To Know: Coinbase said it received an SEC notice showing the agency made a "preliminary determination" to file an enforcement action against the company alleging violations of the federal securities laws. 

Coinbase believes the potential enforcement actions are related to its spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet. 

In a blog post from Wednesday written by Coinbase chief legal officer Paul Grewal, the company said it asked the SEC for reasonable cryptocurrency rules and got legal threats in return. 

"We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets," Grewal said in the post.

Coinbase CEO Brian Armstrong took to Twitter late Wednesday, echoing Grewal's thoughts on the matter. 

"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 Coinbase (and by extension the broader crypto community) to get before a court," Armstrong said via tweet.

Related Link: Coinbase CEO Explains SEC Wells Notice In NFL Terms: 'We're Playing Pickleball' With Football, Soccer Referees

Following the Wells Notice, Oppenheimer analyst Owen Lau downgraded Coinbase from Outperform to Perform, while Needham analyst John Todaro reiterated Coinbase with a Buy and a $73 price target.

COIN Price Action: Coinbase shares were down 13% at $67.09 at the time of writing, according to Benzinga Pro.

Photo: courtesy of Coinbase.