Coinbase fires back at SEC

TL;DR Breakdown

  • Coinbase has hit back at the U.S. SEC telling a court that its petition for a response about new digital asset regulation was still warranted. 
  • The lawsuit, filed by the crypto exchange last month, employed a writ of mandamus, which seeks court action against federal officials in “exceptional circumstances.”
  • The recent Wells notice received by the crypto exchange, which signifies a pending investigation, further solidified their claims.

Coinbase has hit back at the U.S. Securities and Exchange Commission in its ongoing lawsuit against the regulator, telling a court that its petition for a response about new digital asset regulation was still warranted. In a fiery 23-page filing to the Third Circuit of the U.S. Court of Appeals, Coinbase accused the SEC of speaking out of both sides of its mouth and being wrong at each end.

The lawsuit, filed by Coinbase last month, employed a writ of mandamus, which seeks court action against federal officials in “exceptional circumstances.” Coinbase’s objective is to obtain a specific response from the SEC regarding its previous request for new rules concerning digital assets. At the heart of the dispute lies the longstanding debate over which digital assets should be considered securities and, consequently, subject to SEC trading rules.

The SEC had informed the court earlier this month that Coinbase’s legal action was “baseless” and that it still had more time to consider the original request. However, Coinbase reiterated its argument in the latest filing, claiming that the SEC had already made up its mind to deny its request for new rules. The company pointed to public comments made by SEC Chair Gary Gensler, suggesting that the agency had no intention of engaging in rulemaking in the foreseeable future.

“The SEC’s and its Chair’s words and actions leave no doubt of the agency’s plans,” Coinbase wrote.

“The SEC has no intention of engaging in such a rulemaking in the foreseeable future, and that decision may be unreviewable indefinitely unless the Court grants Coinbase’s mandamus petition.”

Coinbase vs SEC

According to Coinbase, the SEC’s enforcement actions against the company demonstrate that it is disregarding the petition. Coinbase also accused the regulator of ignoring other petitions from the crypto industry for years, indicating a lack of willingness to address the issue. The recent Wells notice received by the crypto exchange, which signifies a pending investigation, further solidified their claims. The crypto exchange argued that these enforcement actions assume the securities laws are clear and applicable to digital assets, rendering additional rulemaking unnecessary.

In its filing, the crypto exchange emphasized the urgency of the matter and asserted that unless the court grants their mandamus petition, the SEC’s decision may remain unreviewable indefinitely. The company believes that the SEC’s actions and statements provide ample evidence of its intentions, leaving no doubt about its stance on digital asset regulation.

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