Coinbase CLO Flags Inconsistencies In US SEC’s Securities Claim

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As an analyst with over two decades of experience in the legal and financial sectors, I find myself increasingly concerned about the inconsistency and apparent lack of transparency from the US Securities and Exchange Commission (SEC). The recent developments in the Lejilex case, where the SEC seems to be telling different stories to different judges, are troubling.

Paul Grewal, serving as the Chief Legal Officer at Coinbase, has identified discrepancies in significant legal arguments presented by the U.S. Securities and Exchange Commission (SEC). His viewpoint is grounded on the Lejilex lawsuit controversy, where the SEC submitted a response brief.

Coinbase Support For Lejilex in SEC Lawsuit

In the Lejilex case, the SEC stated that whether a digital asset transaction qualifies as a securities transaction isn’t solely based on the nature of the asset itself. Interestingly, Grewal pointed out that the SEC presented arguments contradicting this stance to Judge Failla in another case, stating the exact opposite.

He claimed the SEC is obviously telling one judge one thing and telling the other something else.

A top executive at Coinbase, a well-known U.S cryptocurrency exchange, has expressed disapproval towards the inconsistency they see in regulations coming from American authorities. For several months now, Coinbase has been advocating for Lejilex, specifically against the Securities and Exchange Commission (SEC). In July, they demonstrated their backing by submitting an Amicus Brief, which argued against what they perceived as overstepping boundaries on the part of the SEC. Essentially, Coinbase has consistently urged the SEC to offer more clear guidelines concerning the regulation of the cryptocurrency sector.

Previously, Grewal expressed that Coinbase intends to act according to the law within its boundaries, aiming to secure regulatory clarity for the vast number of U.S. residents holding cryptocurrencies. The company has pursued this objective in various manners, such as challenging the denial of a rulemaking petition submitted to the U.S. Securities and Exchange Commission.

In addition, he emphasized that strict regulation through enforcement can be detrimental to consumers, stifle innovation, and negatively impact the U.S. economy.

SEC Lawsuits With Ripple

Regarding the ongoing Coinbase lawsuit with the SEC, there’s been an unforeseen halt in the Commission’s request for additional time to finish their investigation. To provide some context, the government agency asked the court to extend the deadline for discovery, seeking a four-month extension which would shift the deadline from October 18 this year to February 18, 2022.

As they are waiting, Coinbase has submitted a request asking the U.S. Commodity Futures Trading Commission (CFTC) to share communications with the issuers of 12 specific tokens mentioned in a related court case filed by the Securities and Exchange Commission (SEC). This request is intended to aid Coinbase in its ongoing legal proceedings taking place in the Southern District of New York (SDNY).

Ripple Labs, a company specializing in blockchain payments, is also under prolonged scrutiny from the U.S. Securities and Exchange Commission (SEC) regarding its activities. This ongoing dispute between Ripple and the SEC has lasted for more than three years. In response to a ruling about XRP‘s status as a security, the SEC has filed an appeal notice.

Several pro-XRP lawyers think the regulator does not stand chance this time as well.

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2024-10-03 21:48