The popular crypto exchange Coinbase has risen to challenge the US Securities and Exchange Commission (SEC) over its sporadic enforcement actions against crucial industry players. The firm believes that the SEC should focus on essential aspects of its work, which include creating proper securities rules and guidance.
Coinbase filed an amicus brief in the ongoing insider trading case between SEC and Wahi regarding insider trading allegations against the latter, urging the court to dismiss it.
This came after the Chamber of Digital Commerce (CDC) filed amicus briefs last month urging the court to dismiss the same lawsuit. In its filing, the CDC stated that the SEC’s regulation by enforcement is a threat to US digital market and its investors.
SEC Should Stop Pursuing Misguided Lawsuits, Coinbase Chief Legal Officer
Coinbase believes the US SEC has deviated from its primary role in pursuing misguided lawsuits. The firm filed the amicus brief urging the court to dismiss the insider trading allegations as it is an example of such a lawsuit.
The chief legal officer for Coinbase, Paul Grewal, revealed the action in a tweet. In his posts, Grewal disclosed that the crypto exchange had tried to register with the commission to offer digital assets securities. But all the efforts were futile, and the ongoing case only worsens things.
Grewal also reiterated that Coinbase doesn’t list securities but would want to do so. Moreover, the firm had sent 50 questions to the commission that required to be answered for it to list securities but didn’t hear anything back. Instead, the SEC has left its job, which is developing rules or registration options, to pursue actions that create ambiguity in the definition of an investment contract.
Paul Grewal also referred to the wire fraud case the DOJ filed against Coinbase’s former employee and accomplices. He believes the Department of Justice didn’t charge them for securities fraud since the assets involved are not securities. The DOJ recognized that the rule of law matters, making its fraud case against Ishan Wahi valid and acceptable.
The rule of law matters, something the DOJ recognized when it charged our former employee and his accomplices with wire fraud, but not securities fraud. This made sense, for the simple reason that the assets at issue are not securities. 4/5
— paulgrewal.eth (@iampaulgrewal) March 14, 2023
But in the instance of the SEC’s charges of securities fraud against Ishan Wahi, Coinbase is asking the court to dismiss it since it doesn’t offer securities.
Regulators Clamp Down On Crypto Sector
The crypto industry has recorded massive enforcement actions from different regulators across the US. Some actions led to the collapse of three crypto-friendly banks; Silvergate, Silicon Valley, and Signature bank.
Silvergate struggled with the extended bearish trend in the crypto industry as it affected its operations. Then following the collapse of crypto exchange FTX, the arrest of its founder Sam Bankman-Fried and the fall of its sister company Alameda research, the bank faced incessant legal actions by regulators for having links with them.
Apart from these recent incidents, the United States Securities and Exchange Commission clamped down on many crypto firms earlier. Some of these firms include Kraken for not registering its staking services, Coinbase, Binance, and Paxos over Binance stablecoin, BUSD.
Featured image from Pixabay and chart from Tradingview.com