Coinbase sues SEC after months of silence from federal regulator
- Coinbase took legal action against the SEC on Monday, asking a federal judge to force the regulator to share its answer on Coinbase's July 2022 petition on whether existing securities rule-making processes could be extended to the crypto industry.
- The 2022 petition didn't receive a specific public response from the SEC, which has pursued a spate of enforcement actions against individuals and entities in the crypto industry.
- Coinbase was the subject of a Wells notice from the SEC in March, a formal warning that an enforcement action against the exchange could be expected.
Crypto exchange Coinbase filed suit against the Securities and Exchange Commission on Monday, asking that the regulator be forced to publicly share its answer to a months-old petition on whether it would allow the crypto industry to be regulated using existing SEC frameworks.
The July 2022 petition asked that the SEC "propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods," referring to digital assets like cryptocurrencies.
The SEC did not offer a specific public response to Coinbase's petition, but in recent months has aggressively ramped up enforcement actions and warnings against crypto exchanges, including Coinbase.
"From the SEC's public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. But they haven't told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision," Coinbase chief legal officer Paul Grewal said in a blog post.
Since January, the SEC has taken action against crypto exchanges Bittrex & Gemini, crypto lender Genesis, and a number of individual actors accused of manipulating crypto assets, including crypto entrepreneur Justin Sun and disgraced Terraform Labs founder Do Kwon.
The move is Coinbase's first formal salvo against the regulator, a little over a month after it was warned by the SEC of pending legal action through a Wells notice.
"Coinbase does not take any litigation lightly, especially when it relates to one of our regulators. Regulatory clarity is overdue for our industry," Grewal said in the blog post. "Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business."
The SEC declined to comment.
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