https://thedefiant.io/coinbase-girds-for-the-defining-case-of-crypto-era
SEC Alleges Coinbase Is Violating US Securities Laws
Coinbase, the United States’ largest crypto exchange, is preparing for a legal battle with the country’s top financial watchdog.
Staff at the Securities and Exchange Commission believe Coinbase is in violation of U.S. securities laws, according to a copy of a Wells Notice the company shared on social media. The notice is not a formal lawsuit but typically precedes one.
An SEC lawsuit could kick off a legal battle with little precedent in the fledgling industry. It could also settle, once and for all, a question that has tormented crypto: whether all digital assets except Bitcoin as unregistered securities. If the SEC were to sue Coinbase on the grounds that most assets listed there are unregistered securities, a ruling could settle the question, according to former SEC attorney Marc Fagel.
While the case being fought by digital payments network Ripple is closer to a resolution, Fagel said, “what may come out of Coinbase could [make it] the defining case of the crypto era.”
The notice has no effect on Coinbase products or services, Coinbase Chief Counsel Paul Grewal wrote in a blog post Wednesday.
Grewal and Coinbase CEO Brian Armstrong both said they welcome the opportunity to defend the company’s approach to crypto asset listings in court.
“Going forward, the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets,” Armstrong wrote on Twitter.
Coinbase stock fell more than 15% in after-hours trading Wednesday.
In a separate action Wednesday, the SEC sued Justin Sun, the founder of the Tron blockchain, for selling unregistered securities and for market manipulation.
Both actions come on the heels of a White House report authored by the Biden Administration’s top economic advisors, who argue that digital assets and blockchain technology have little value beyond creating artificial scarcity and fomenting market volatility.
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