- Coinbase accuses SEC of using regulations to crush the cryptocurrency sector.
- The legal battle between Coinbase and SEC could have broad implications for the industry.
The US Securities and Exchange Commission (SEC) and its chairman, Gary Gensler, have come under heavy fire in a new filing from US-based cryptocurrency exchange Coinbase, which allege that their activities are intended to suppress the cryptocurrency market.
Coinbase and the SEC are battling it out in court right now over alleged unregistered sales of what the agency refers to as “securities.”
The SEC’s recent escalating enforcement activities, as Coinbase’s Friday filing makes clear, seem to be a concerted attempt to harm the digital asset sector. The exchange charges the SEC of pursuing “inconsistent and unsupportable” legal claims and of continuing a discriminatory campaign against the sector.
Coinbase argues that rather than facilitating compliance with federal law, the SEC views regulations as “weapons” to destroy favored industries and rejects its responsibility to make compliance with its rules practical.
Coinbase: Allegations of Policy Overreach
Rejecting the SEC’s claims, Coinbase says that established law calls for rulemaking. The exchange charges that the SEC is trying to modify the rules by claiming “unlawful” authority over the digital asset market by means of harsh enforcement proceedings.
The exchange further argues that the SEC’s latest brief shows a change in its position on digital assets, making its promise to digital asset companies to “come in and register” a farce.
There has been a lot of interest in the Coinbase v. SEC legal dispute. In June, the regulator first brought a lawsuit claiming Coinbase operated as an “unregistered broker and exchange.”
Also, March saw a ruling in favor of the SEC from US District Judge Katherine Polk Failla, who said that the transactions at issue were within the parameters that courts use to classify securities.
The decision affects Coinbase as well as other well-known bitcoin exchanges like Binance. In its continuing action against Binance, alleging unregistered offers and sales of crypto asset securities, the SEC has sent notice of Failla’s ruling.
To compound the legal strains, ETHNews reported that Coinbase was the target of a new class action lawsuit regarding cryptocurrency securities earlier in May.