Coinbase is suing the SEC after months of silence from the federal regulator

  • Coinbase took legal action against the Securities and Exchange Commission on Monday, asking a federal judge to compel the regulator to share its answer to Coinbase’s July 2022 petition about whether existing securities rulemaking processes can be extended to the crypto industry.
  • The 2022 petition did not receive a specific public response from the Securities and Exchange Commission, which has pursued a series of enforcement actions against individuals and entities in the cryptocurrency industry.
  • Coinbase was the subject of Wells’ notice from the SEC in March, an official warning that enforcement action against the exchange is expected.

Employees of Coinbase Global Inc, the largest cryptocurrency exchange in the United States, watch as they present their listing on the Nasdaq MarketSite jumbotron in Times Square in New York, April 14, 2021.

Shannon Stapleton | Reuters

Crypto exchange Coinbase sued the Securities and Exchange Commission on Monday, demanding that the regulator be compelled to publicly share its answer. Months old PetitoN on whether to allow regulation of the cryptocurrency industry using existing SEC frameworks.

The July 2022 petition asked the SEC to “propose and approve rules governing the regulation of securities offered and traded via digitally native methods,” referring to digital assets such as cryptocurrencies.

The SEC has not provided a specific public response to Coinbase’s petition, but in recent months has aggressively ramped up enforcement actions and warnings against cryptocurrency exchanges, including Coinbase.

“From the SEC’s public statements and enforcement activity in the crypto industry, it appears the SEC has already made up its mind to deny our petition. But they haven’t told the public yet. So today’s lawsuit from Coinbase simply asks the court to require the SEC to share Its decision,” Paul Grewal, Chief Legal Officer, Coinbase, said He said in a blog post.

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Since January, the SEC has taken action against cryptocurrency exchanges Bittrex & Gemini, crypto lender Genesis, and a number of individual actors accused of manipulating crypto assets, including crypto entrepreneur Justin Sun and Terraform Labs founder Do Kwon.

The move is Coinbase’s first official launch against the regulator, just over a month after the Securities and Exchange Commission (SEC) warned of pending legal action through a Wells notice.

“Coinbase does not take any litigation seriously, especially when it comes to one of our regulators. Regulatory clarity has been lagging behind in our industry,” Grewal said in the blog post. “However, Coinbase and other crypto companies face potential regulatory enforcement action from the SEC, although we have not been told how the SEC believes the law applies to our business.”

The Securities and Exchange Commission did not immediately respond to a request for comment.

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