In its response, Coinbase clearly mentioned that the exchange has not engaged in any activity that violates federal securities laws. also slammed the SEC for refusing to engage in a meaningful conversation on crypto regulations.
On Thursday, April 27, crypto exchange coinbase offered a fiery response to last month’s Wells notice issued by the US Securities and Exchange Commission (seconds, Coinbase Chief Legal Officer Paul Grewal bluntly told the federal regulator that any enforcement action against the exchange would pose major “problematic risks” for the SEC and that the regulator would “fail on the merits.”
In clear terms, Grewal said that “Coinbase does not list, express or effectively trade in securities”. He further stated that the analysis used by SEC staff to justify an enforcement action “appears to be based on superficial and inaccurate analogies to products and services offered by others”.
In its wells notice Crypto exchange Coinbase was sued last month after the SEC noted that Coinbase’s spot trading, staking, custody and institutional trading businesses were at risk. Furthermore, the regulator’s warning means that the SEC could allege that Coinbase was offering and trading unregistered securities, thereby violating federal securities laws. In a separate statement to CNBC, Grewal Said,
“At the time we went public, we had detailed discussions with the SEC about the aspects of our business that are now – two years later – the subject of the Wells Notice. Nothing has changed.”
Last month, the SEC made similar allegations against another crypto exchange. Kraken leading to a $30 million settlement. Furthermore, the SEC also forced Kraken to cease its staking services in the US market.
SEC vs Coinbase
As noted, the US SEC is threatening several other crypto exchanges over violations of securities laws. However, Coinbase has stuck to its position, claiming no wrongdoing and adding that it has been in extensive talks with regulators over the past few years.
If the SEC is successful in its allegations, it may ask the crypto exchange to cease its operations. Coinbase executives, on the other hand, have always shown an intention to engage in a meaningful dialogue with the SEC in order to establish clarity for the broader cryptocurrency market.
However, Coinbase said that despite its efforts over the years, the SEC and its staff have shown no intention of engaging in negotiations. Coinbase recently launched legal action Against the SEC for failing to provide regulatory clarity and guidance on US crypto markets. In a word to CNBC, a Coinbase spokesperson said:
“The SEC generally does not acknowledge the existence or non-existence of any investigation until or unless charges are filed. Coinbase never intended to sue the Commission. The Commission should not sue either,” Coinbase wrote in its response. Coinbase said, “the litigation will put the commission’s own actions to the test,” and “destroy the public trust cultivated over decades.”
Bhushan is passionate about Fintech and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
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