In a recent filing, US-based cryptocurrency exchange Coinbase has made sharp accusations against the US Securities and Exchange Commission (SEC) and its chairman, Gary Gensler, claiming their actions aim to stifle the cryptocurrency sector.
The filing comes amid an ongoing legal battle between Coinbase and the SEC, which alleges that the exchange engaged in unregistered sales of what the regulator calls “securities.”
Coinbase Challenges SEC’s ‘Inconsistent Legal Claims’
Coinbase’s Friday filing highlights the SEC’s increasing enforcement actions in recent months, suggesting a deliberate effort to undermine the digital asset industry.
The exchange accuses the SEC of advancing “inconsistent and unsupportable” legal claims and of perpetuating an oppressive campaign against the industry. Coinbase contends that the SEC denies its duty to make compliance with its rules feasible, treating regulations as “weapons” to dismantle disfavored industries rather than enabling compliance with federal law.
Coinbase rebuffs the SEC’s arguments, asserting that rulemaking is required under settled law. The exchange accuses the SEC of attempting to effect a major policy change by asserting “unlawful” jurisdiction over the digital asset industry through punitive enforcement actions.
The exchange further contends that the SEC’s assurance to digital asset firms to “come in and register” was a sham, as the agency’s recent brief indicates a shift in its stance on digital assets.
Ripple Effects Across Cryptocurrency Exchanges
The legal case between Coinbase and the SEC has gained significant attention. The regulator initially filed a suit in June, alleging that Coinbase acted as an “unregistered broker and exchange.”
US District Judge Katherine Polk Failla ruled in favor of the SEC in March, stating that the transactions in question fell within the framework used by courts to identify securities.
This ruling has implications for Coinbase and other major cryptocurrency exchanges like Binance. The SEC has filed a notice of Failla’s decision in its ongoing lawsuit against Binance, accusing it of unregistered offers and sales of crypto asset securities.
Overall, the clash between Coinbase and the SEC underscores the broader regulatory challenges the cryptocurrency industry faces.
The lack of clear guidelines and rulemaking has created uncertainty and hindered the industry’s growth. Industry participants argue that a court order directing the SEC to commence rulemaking is necessary to bring clarity and stability to the digital asset sector.
As the legal battle continues, the outcome will most likely have far-reaching implications for Coinbase and the broader cryptocurrency industry. It will shape the regulatory landscape and determine the sector’s future trajectory in the US.
Featured image from Shutterstock, chart from TradingView.com