Crypto exchange Coinbase filed a lawsuit against the SEC on Monday. They asked that the regulator be forced to publicly declare its answer to a months-old petition. The petition was on whether it shall allow the crypto industry to be regulated using already existing Securities and Exchange Commission or SEC frameworks.
There was a petition in July 2022. The petition asked that the Securities and Exchange Commission which referred to digital assets such as cryptocurrencies. It said:
“propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods,”
What Coinbase said about the petition to SEC
However, the Securities and Exchange Commission did not offer any specific public response to the petition of Coinbase. But, in recent months, it has aggressively ramped up its enforcement actions and warnings against cryptocurrency exchanges, including Coinbase.
Paul Grewal, the chief legal officer of Coinbase, commented in a blog post. He referred to the public statements of the Securities and Exchange Commission. He also said that from its enforcement activity in the cryptocurrency industry, it looked as if the Securities and Exchange Commission had made up its mind to deny their petition. But they have not told the public yet. As a result, Coinbase filed to ask the court to ask the Securities and Exchange Commission to share its decision.
The SEC, or Securities and Exchange Commission, took several actions against cryptocurrency exchanges. For example, the SEC accused crypto exchanges Bittrex and Gemini and crypto lender Genesis of manipulating cryptocurrency assets.
The move is the first formal petition of Coinbase against the regulator. This came after the Securities and Exchange Commission warned it of pending legal action through a Wells notice last month.
Paul Grewal further said in the blog post that the company doesn’t take any litigation lightly. This is especially true when it refers to one of their regulators. Regulatory clarity is overdue for their industry. Yet, Coinbase and several other cryptocurrency companies are facing regulatory enforcement actions from the SEC. This is even though they have not been told how the Securities and Exchange Commission believes the law applies to their business.
TechCrunch reported last month that the Securities and Exchange Commission threatened to sue Coinbase. This was over some of the exchange’s products. Coinbase is the gold standard amongst cryptocurrency exchanges for compliance with the laws. But, the American firm suffered over the years because it could not develop and roll out new products. This was because of legal uncertainties.
The co-founder and chief executive of the company, Brian Armstrong, said that the exchange can consider moving its headquarters outside the US. This is unless the country changes its approach to regulations.
Shares of Coinbase came down 15 percent last month after the Securities and Exchange Commission issued a warning indicating that the company could face charges for violating laws that protect investors.
It is one of the most popular cryptocurrency companies. It is a publicly traded company in America. The company operates a crypto exchange platform. It is the largest crypto exchange in the USA by trading volume. Fred Ehrsam and Brian Armstrong started the cryptocurrency company Coinbase in 2012.
On 22nd March 2023, the crypto company received a Wells notice from the SEC. This signaled that the SEC intended to begin an enforcement action over the company.