In the US, crypto exchange Coinbase has filed a lawsuit against the powerful SEC. At its core, the case is about finally getting answers from the SEC on the regulation of crypto.
The U.S. Securities and Exchange Commission (SEC) has flexed its muscles in recent months, suing dozens of crypto projects. Legal observers are already warning that incalculable risks are emerging for investors in Bitcoin and Co. from the SEC’s tough stance. Thus, the latest move should please the leading U.S. crypto exchange Coinbase, which is turning the tables. In a blog post, Coinbase explains that it is now taking the SEC to court for its part.
The background to this is a petition that Coinbase submitted to the SEC back in the summer of 2022 and which has so far gone unanswered. The crypto exchange wanted to obtain clarity on issues such as the possible classification of cryptocurrencies as securities subject to registration and whether staking is a legal service. In its current motion to a Philadelphia court, Coinbase refers to regulations for agencies such as the SEC to respond to petitions in a reliable and timely manner. Since the SEC apparently ignores this requirement, the only way left now to get answers from the SEC is a court ruling, it says.
Coinbase also makes it clear that it does not expect the court to deal with the individual questions that the SEC has. It simply wants to force the SEC to provide legally compliant information. If these do not turn out to be to Coinbase’s liking, they can then take legal action on individual issues. There has been no comment from the SEC on the latest developments so far. SEC chief Gary Gensler generally holds the view that almost all cryptocurrencies are subject to approval and that his agency was simply implementing existing regulations with its wave of lawsuits.
Coinbase had for years cultivated the image of being the crypto exchange in the U.S. and around the world that adheres most closely to laws and seeks constant dialogue with regulators. But the relationship with the SEC has been crumbling since September 2021, when Coinbase had to withdraw an offer to pay interest on the stablecoin USDC. The relationship has cooled completely since summer 2022, when Coinbase learned that the SEC was preparing a lawsuit (which has not yet become public).
Conclusion: Coinbase exerts pressure on the SEC – crypto industry tense
The discord between the crypto industry and the SEC is impressively demonstrated by the rib (XRP) case, where a lawsuit will soon last two and a half years. The precedent has also startled those who used to be able to handle a measured intervention by the SEC. With the front now opened between Coinbase and the SEC, crypto lawyer James A. Murphy aka MetaLawMan expects swift developments. Since there will only be one round of hearings and a written evidentiary proceeding, a ruling should be available in months, not years, Murphy wrote on Twitter. Like other representatives of the crypto scene, he welcomes the fact that the SEC must now finally take a stand and at the same time shed light on the authority’s less than transparent decisions.