Coinbase Slams SEC for “Oppressive” Approach to Crypto

Sec vs Coinbase

Over the last year, the US Securities and Exchange Commission (SEC) has been scrutinized for its antagonistic activities against the cryptocurrency industry, raising concerns about its jurisdiction over the asset class. Last July, cryptocurrency exchange Coinbase petitioned the EU to build a specific regulatory framework for the industry. However, the SEC rejected the plan, calling it ‘unwarranted’ and claiming that current securities regulations were adequate for regulating cryptocurrency holdings.

Coinbase Calls SEC Out

Coinbase submitted an opening brief in the US Court of Appeals for the Third Circuit on Monday, arguing against the SEC’s “arbitrary” failure to demonstrate the authority it wants over the sector through a legitimate rule-making process.

The exchange underscored the commission’s regulation by enforcement campaign’ against the sector, which stemmed from Chair Gary Gensler’s declaration that most digital assets are securities, despite the commission’s earlier claim of limited power over the asset class.

“After its Chair unilaterally decreed his belief that most digital assets are securities, the agency swiftly pivoted by attempting to regulate them—not by rulemaking, but through enforcement, in a scorched-earth, nationwide campaign against an entire industry,” the brief stated.

Coinbase underscored the commission’s repressive character, claiming that the SEC coerces firms to “comply with inapplicable, inept, and still-evolving securities-law requirements” or face enforcement action, but giving no obvious avenue to do so.

The exchange has now petitioned the court to overturn the commission’s judgment and order the start of a long-overdue rule-making process, a decision required to halt the commission’s hostile measures.

SEC vs. Coinbase and Other Crypto Exchanges

Several crypto businesses, including Coinbase, Ripple, Kraken, and Binance, have faced regulatory scrutiny in recent years.

The SEC filed legal action against Ripple in December 2020, alleging the company fraudulently generated more than $1.3 billion through the sale of unregistered securities. The legal dispute, which is still ongoing, has taken various turns, including allegations that Ripple CEO Brad Garlinghouse engaged in personal unregistered XRP transactions totalling around $600 million.

Moving on to exchanges, the commission filed separate actions against Binance and Coinbase in June 2023, claiming the operation of unregistered securities trading platforms and breaching US securities laws. To bolster its regulatory measures, the SEC filed charges against Kraken later that year, accusing the exchange of registration breaches despite a $30 million settlement. Each of the commission’s victims has taken a forceful stand against its allegations, filing counter-cases and demanding dismissal of the lawsuits.

Author: Simeon

Simeon is a seasoned crypto writer with a passion for exploring the fascinating world of blockchain and digital currencies. With a background in finance and technology, Simeon brings a unique perspective to his writing, delving into the complexities of decentralized finance, cryptocurrency trading, and emerging blockchain projects.