Coinbase is suing the SEC after months of silence from the federal regulator
- Coinbase took legal action against the SEC on Monday, asking a federal judge to compel the regulator to share its response to Coinbase’s July 2022 petition on whether existing securities regulatory processes could be extended to the crypto industry.
- The 2022 petition did not receive a specific public response from the SEC, which has pursued numerous enforcement actions against individuals and entities in the crypto industry.
- Coinbase was the subject of a Wells notice from the SEC in March, a formal warning that enforcement action against the exchange could be expected.
Employees of Coinbase Global Inc, the largest U.S. cryptocurrency exchange, watch as their listing is displayed on the Nasdaq MarketSite jumbotron in Times Square in New York, April 14, 2021.
Shannon Stapleton | Reuters
Crypto exchange Coinbase filed a lawsuit against the Securities and Exchange Commission on Monday, asking that the regulator be forced to publicly share its response to a months-old petition on whether it would allow the crypto industry to be regulated using existing SEC frameworks.
The July 2022 petition requested that the SEC “propose and adopt rules to govern the regulation of securities offered and traded via digitally native methods,” referring to digital assets such as cryptocurrencies.
The SEC did not provide a specific public response to Coinbase’s petition, but in recent months has aggressively increased enforcement actions and warnings against crypto exchanges, including Coinbase.
“From the SEC’s public statements and enforcement activity in the crypto industry, it appears that the SEC has already decided to deny our petition. But they haven’t told the public yet. So the action Coinbase filed today is simply asking the court. ask the SEC to share its decision,” Coinbase general counsel Paul Grewal said in a blog post.
Since January, the SEC has taken action against crypto exchanges Bittrex & Gemini, crypto lender Genesis, and a number of individual actors accused of manipulating crypto assets, including crypto entrepreneur Justin Sun and disgraced Terraform Labs founder Do Kwon.
The move is Coinbase’s first formal salvo at the regulator, just over a month after it was warned by the SEC of pending legal action through a Wells notice.
“Coinbase does not take any litigation lightly, especially when it relates to one of our regulators. Regulatory clarity is overdue for our industry,” Grewal said in the blog post. “Still, Coinbase and other crypto companies face potential regulatory enforcement actions from the SEC, although we have not been told how the SEC believes the law applies to our business.”
The SEC did not immediately return a request for comment.
SEE: Crypto needs regulatory clarity, says industry lawyer
