Coinbase Lambasts SEC, Urges Withdrawal of Frivolous Lawsuits and Apology
Bitcoin Skyrockets Above $71K, Easing Worries of Traders Amid Consolidation
Bitcoin has reached a three-month peak, surging past the $71,000 mark and bringing a sense of relief to traders who were growing weary of the prolonged consolidation period for the cryptocurrency. However, along with this surge, the ongoing legal battle between Coinbase and the U.S. Securities and Exchange Commission (SEC) has intensified. CEO Brian Armstrong of Coinbase recently voiced strong criticism against the SEC on social media, urging the incoming chair of the commission to withdraw “frivolous lawsuits” and offer an apology to the American public.
Armstrong suggested that such actions were necessary to restore the public’s trust in the regulatory body. His post also brought up pivotal regulatory questions, such as “Is a digital asset considered a security?” and “Can the SEC effectively regulate digital asset exchanges?”—highlighting the unresolved regulatory uncertainty within the industry.
Notably, Coinbase showed support for Beba LLC and the DeFi Education Fund in an amicus brief filed on October 28th, criticizing the SEC’s “regulation-by-enforcement campaign” against digital asset companies. The brief accuses the SEC of failing to provide clear guidelines to the industry and argues that, without formal rulemaking, companies find themselves trapped in a compliance “Catch-22” situation.
Furthermore, Coinbase claims that when it went public in 2021, the SEC did not object to its listing or the inclusion of digital assets on its platform. However, Coinbase asserts that the commission has since changed its position, with SEC Chair Gary Gensler now classifying most digital assets as securities.
“SEC’s Lack of Transparency”
Coinbase also argues that the SEC’s approach lacks transparency, stating that “the agency has consistently refused to engage in rulemaking,” instead relying on punitive enforcement actions to regulate the industry. The exchange also highlighted its extensive efforts, including 30 meetings with the SEC in 2022 to seek regulatory guidance, only to receive insufficient responses. Coinbase’s legal petition, initially filed in 2022, calls for regulatory clarity, asserting that existing securities laws, which were designed for traditional assets, are inadequate for the unique nature of digital assets.
The SEC maintains that current laws are adequate, citing the Supreme Court’s “investment contract” standard. However, Coinbase’s ongoing case could lead to more defined regulation in an industry where rapid technological advancements demand adaptable and well-defined rules. This case could have significant implications for the future regulatory framework surrounding digital assets in the United States.
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