Coinbase, one of the largest cryptocurrency exchanges in the world, is facing an existential risk as the US Securities and Exchange Commission (SEC) increases its scrutiny of the company's activities. The SEC has reportedly sent Coinbase a Wells notice, which is a formal warning that the agency is planning to sue the company over its planned launch of a lending product called Coinbase Lend.

The SEC has raised concerns that Coinbase Lend may be considered a security, and has warned that the product may violate securities laws. The SEC has also reportedly been investigating Coinbase's trading practices and its compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.

The increased scrutiny from the SEC highlights the growing regulatory challenges and risks facing the digital asset industry, as regulators seek to enforce existing laws and regulations and to establish new rules and frameworks to govern the rapidly evolving market.

Coinbase is one of the largest and most well-known cryptocurrency exchanges in the world, and its potential legal troubles could have significant implications for the broader digital asset industry. The case also underscores the need for greater clarity and consistency in regulatory frameworks and legal protections for users and investors in the digital asset industry.

(by Fredrik Vold)