Coinbase Slams SEC, Calls for Withdrawal of Baseless Lawsuits and Apology
Bitcoin Skyrockets Above $71K, Easing Concerns of Traders During Consolidation Period
Bitcoin has reached its highest level in three months, surpassing $71,000 and bringing relief to traders who were growing weary of the prolonged consolidation of the cryptocurrency. However, as Bitcoin surged, the legal battle between Coinbase and the U.S. Securities and Exchange Commission (SEC) intensified. Brian Armstrong, the CEO of Coinbase, recently expressed strong criticism of the SEC on social media, urging the next chair of the commission to withdraw “baseless lawsuits” and offer an apology to the American public.
Armstrong believes that these actions are necessary to restore public trust in the regulatory body. In his post, he also posed important regulatory questions, such as “Is a digital asset considered a security?” and “Can the SEC effectively regulate digital asset exchanges?” These questions highlight the unresolved regulatory uncertainties within the industry.
Notably, Coinbase supported Beba LLC and the DeFi Education Fund in a case against the SEC by filing an amicus brief on October 28. In the brief, Coinbase criticized 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 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 stance, with SEC Chair Gary Gensler now considering most digital assets as securities.
“SEC Lacks Transparency”
Coinbase also argues that the SEC’s approach lacks transparency, stating that “the agency has consistently avoided engaging in rulemaking” and instead relies on punitive enforcement actions to regulate the industry. The exchange also emphasized its extensive efforts, including 30 meetings with the SEC in 2022, to seek regulatory guidance, only to receive insufficient responses. Coinbase’s legal petition, originally filed in 2022, calls for regulatory clarity and argues that the existing securities laws, designed for traditional assets, are inadequate for the unique characteristics of digital assets.
The SEC maintains that current laws are sufficient, citing the Supreme Court’s “investment contract” standard. However, Coinbase’s ongoing case could push for clearer regulations in an industry where rapid technological advancements require flexible and well-defined rules. This case may have significant implications for the future regulatory framework of digital assets in the United States.
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