The U.S. Securities and Exchange Commission is cracking down hard on cryptocurrency companies, warning about pending action Coinbase Global Inc. and taking action against those behind several tokens and their celebrity endorsers.

Coinbase, the biggest cryptocurrency exchange in the U.S., was issued with a Wells notice, a warning that the SEC had identified potential violations of U.S. securities law. A Wells notice is a letter that the SEC sends to people or firms at the conclusion of an investigation stating that the SEC is planning to bring an enforcement action against them.

What Coinbase allegedly did was not clear in the notice, with only an undefined portion of the company’s digital assets, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet mentioned.

“Today’s Wells notice does not provide a lot of information for us to respond to,” Coinbase said in a blog post. “The SEC staff told us they have identified potential violations of securities law, but little more.” Coinbase asked for specific information about the investigation and the allegations of wrongdoing, but the SEC has so far not provided any further details.

Coinbase has unsurprisingly taken umbrage with the SEC, claiming, among other things, that the Wells notice came after it provided multiple proposals to the SEC about registration over the course of months, all of which the SEC ultimately refused to respond to.

The move by the SEC comes after Coinbase revealed in August that it was under investigation by the commission. At the time, the company said that the SEC was investigating some of its products, including staking, which allows holders to earn interest by holding certain digital assets.

Staking services are a common product offered by cryptocurrency exchanges as a way for users to earn rewards by holding cryptocurrencies. Staking is a process by which crypto asset holders can make a return by locking up their currency to assist in the verification of transactions to secure blockchain networks. It’s also a way for traders to maintain their balances during market downturns.

However, Coinbase was not the only target of the SEC today. Those linked to the Tronix and BitTorrent tokens were sued. Coindesk reported that Justin Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry Inc. have been sued for both selling unregistered crypto asset securities and for alleged fraud.

In a court filing, the SEC alleges that Sun, the founder of Tron, attempted to inflate TRX’s trading volume through a “wash trading” scheme by having his own employees “engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled.” Tron Foundation employees are claimed to have conducted the trades through BitTorrent and Tron Foundation accounts and Rainberry employees are claimed to have transferred funds for the allegedly illicit trading.

Also targeted for their roles in promoting TRX and BTT were eight celebrities, including Lindsay Lohan (pictured) and the YouTuber and boxer Jake Paul. The celebrities are alleged to have promoted the cryptocurrencies without disclosing that they were being paid to do so.

According to CNBC, of the eight celebrities targeted, all but two, Soulja Boy and Mahone, agreed to settle with the SEC for $400,000 in disgorgement, interest and penalties to settle the charges. The celebrities who settled neither admitted nor denied the charges as part of the settlement.

Photo: MTV/Wikimedia Commons