U.S. Securities and Exchange Commission (SEC) has won an early victory in the legal saga involving Coinbase.
U.S. District Judge Katherine Polk Failla wrote that “the Court finds the SEC has sufficiently pleaded that Coinbase operates as an exchange, as a broker, and as a clearing agency under the federal securities laws, and, through its Staking Program, engages in the unregistered offer and sale of securities.”
Coinbase going to court
The decision by Judge Polk Falla means that the case will now go to trial, which Coinbase would have hoped to avoid.
Coinbase’s Chief Legal Officer Paul Grewal would take to social media to post a number of responses to the court ruling:
Today, the Court decided that our SEC case will move forward on most of the claims, but dismissed the claims against Coinbase Wallet. We were prepared for this, and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation. 1/6
— paulgrewal.eth (@iampaulgrewal) March 27, 2024
“While we continue this process and any necessary appeals, we encourage Congress to build on the momentum we saw last year to advance comprehensive digital assets legislation in the US. This is critical if we want innovation to remain in the US,” Grewal would say.
Coinbase is just one cryptocurrency exchange under the SEC microscope. Binance has also faced scrutiny and been embroiled in legal battles about the legitimacy of the crypto company’s origins and trading practices.
Grewal concluded his social media post by saying, “We (Coinbase) remain confident in our legal arguments, we look forward to proving we’re right, we are eager for the opportunity to take discovery from the SEC for the first time, and we appreciate the Court’s continued consideration of our case.”
As cryptocurrency markets have gathered strength, the SEC has been keen to regulate emerging markets and ensure that a set definition is applied to how they trade in digital currency.
SEC Chairman Gary Gensler has been vocal about his and the regulator’s stance on cryptocurrency operators, speaking recently at Columbia Law School saying, “There are participants in crypto securities markets that seek to avoid these (SEC) registration requirements. No registration means no mandatory disclosure. Many would agree that the crypto markets could use a little disinfectant.”
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