Through its chief legal executive, Paul Grewal, the US largest crypto exchange by transaction volume, has declared plans to challenge the Securities and Exchange Commission’s (SEC) decision to deny its petition demanding crypto-specific rules. Coinbase chief attorney decried the continued dismissal of the responsibility to deliver rules specific to the digital assets industry.
Coinbase Declares Return to Court Challenging Denial by SEC
The declaration by Coinbase portrays that the crypto exchange would not take no answer from the Gary Gensler-chaired securities watchdog. Grewal indicated that the crypto exchange would return to the court to challenge the SEC’s denial of the rulemaking petition.
Grewal’s declaration follows the SEC’s move to dismiss the petition by Coinbase that sought the formulation of new crypto rules for the crypto assets industry. Last year, the world’s second-largest crypto exchange initiated a suit petitioning the SEC to propose and adopt crypto-specific rules to regulate digitally native securities.
The petition arose from SEC dragging heels in responding to the answer sought by Coinbase. It prompted the Brian Armstrong-led Coinbase to file a petition to compel a response from the regulator.
SEC chair Gensler revealed denial of the rulemaking response on Friday, December 15. Instead, the Chair hailed the existing securities regime as appropriately formulated to govern the crypto asset securities.
Grewal took to the X (previously Twitter) in a publication affirming plans to challenge the denial. He indicated that the 18-month sentence bore a response contrary to the one required by law.
Grewal indicated that with admissibility from the Third Circuit, the Coinbase attorneys would challenge the abdication of duty demonstrated by the SEC. He noted that all parties assuming a fair perspective on the digital assets ecosystem would acknowledge the need for regulatory clarity.
Coinbase in Endless Legal Battle with SEC
The move by Coinbase to challenge the denial by the SEC would reignite the long-standing tassel pitting the two parties over crypto-related regulation. The San Francisco-headquartered Coinbase has repeatedly claimed that the SEC is uncertain of its rules.
The agency indicated that Coinbase had flouted the securities laws in its submission. The Commission illustrated that Coinbase offered unregistered securities for sale as it leveled a massive lawsuit in June this year.
With the exemption of Bitcoin, the SEC listed various digital token offerings as unregistered securities offered by Coinbase, including Cardano (ADA) and Solana (SOL). The SEC filed that Coinbase commingled multiple functions, including brokerage, clearing house, and custody, without fulfillment of legal requirements.
The legal battles are primarily oriented to one hot issue: ascertaining whether cryptocurrencies are classified as securities. Such surfaces in the lawsuit against Coinbase, where the SEC outlined Cardano, Solana, and Polygon as unregistered securities.
On various occasions, Gensler has indicated that most digital coins and tokens, except Bitcoin, likely are unregistered securities. The pronouncement implies that crypto exchanges allowing the trading of tokens will face legal action from the SEC.
The Coinbase lawsuit came 24 hours after the SEC leveled charges against market leader Binance. The lawsuit saw Binance and founder Changpeng Zhao plead guilty in a $4.3 billion settlement alongside the resignation from his chief executive role.
Last month, the SEC hit San Francisco-based crypto exchange Kraken with charges that echo the complaint lodged against Coinbase. The move prompted Jesse Powell, its co-founder, to lash out at SEC, labeling it as the US leading decel, implying it was slowing progress.
Powell, in his November 21 post on X, alleged the unsatisfied SEC with the $30 million civil penalty imposed in the February settlement. He indicated that the SEC was shopping for a different outcome in California after several beatings in New York courts.
Coinbase’s Grewal Hails Commissioners Urging Real Dialogue on Digital Asset Securities Classification
The move by the SEC is receiving criticism internally, particularly opposing the denial decision to the Coinbase rulemaking petition. Commissioners Mark Uyeda and Hester Peirce expressed disappointment on Friday that the Commission failed to host the critical conversations to ascertain what constitutes securities.
Commissioner Peirce echoed previous criticism of the SEC for portraying ambiguity and disinterested character to facilitate innovation and competition within the financial markets.
Grewal hailed the Commissioners who expressed denial and urged for real dialogue. He invited the SEC to partner with the industry to create laws to benefit consumers and US innovation. He accused the SEC led by the Chair of subjecting Coinbase to defend lawsuits founded upon legal positions varying monthly.
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