Coinbase v. SEC: Here’s What’s Happening Now

Coinbase Chief Legal Officer Paul Grewal shares the latest update in the Coinbase-SEC legal battle.

In a throwback, Coinbase submitted a rulemaking petition to the SEC in July 2022, asking it to “propose and adopt rules” to regulate the cryptocurrency market, to which the SEC has been dragging its feet.

In the most recent update, Coinbase has filed a response to the SEC’s latest “update” on its petition for rulemaking.

We just filed a short response to yesterday’s SEC’s “update” on our petition for rulemaking. We are grateful for the Third Circuit’s attention to this matter. pic.twitter.com/TOFfn0wWYu

— paulgrewal.eth (@iampaulgrewal) November 22, 2023

Coinbase claims the SEC is playing every trick in the book in order not to act on its petition. It explains in its latest response that the court directed Coinbase to file its proposed response to the commission’s Oct. 11 status “no later than” Tuesday.

The SEC, apparently anticipating imminent court action, filed its reply, providing no additional information about its progress but promising to submit a further “status report” on Dec. 15, 2023.

On Nov. 21, the SEC filed an “update” to Coinbase’s rulemaking petition with the Third Circuit.

According to Coinbase, the SEC’s “unsolicited response” may demonstrate that a court order alone will force it to act. It adds that the SEC’s proffer of another report, as it continues to hedge and delay, confirms that only mandamus will compel it to acknowledge that Coinbase’s petition for rulemaking was pocket-vetoed a long time ago.

Coinbase also mentioned Kraken’s litigation, saying that the SEC’s response came only a day after the lawsuit was launched.

Coinbase noted that this might illustrate that the SEC’s asserted need for more time to make up its mind is a mirage. It goes on to say that the SEC’s approval of the Kraken action might be further evidence that it sees no need for regulatory clarity as its course is determined.

Following an earlier lawsuit this year in which Kraken paid $30 million in settlement, the Securities and Exchange Commission again charged Kraken on Nov. 20 with operating as an unregistered securities exchange, broker, dealer and clearing agency.

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