TLDR
Coinbase,
one
of
the
largest
cryptocurrency
exchanges
in
the
United
States,
is
intensifying
its
legal
battle
against
the
Securities
and
Exchange
Commission
(SEC),
leveraging
recent
judicial
precedents
and
highlighting
inconsistencies
in
the
regulator’s
approach
to
the
crypto
industry.
The
exchange
is
building
on
the
momentum
from
Judge
Amy
Berman
Jackson’s
ruling
in
the
SEC
v.
Binance
case,
which
determined
that
secondary
sales
of
Binance’s
BNB
token
do
not
qualify
as
securities
transactions
under
the
Howey
test.
This
decision
has
provided
Coinbase
with
valuable
ammunition
in
its
ongoing
dispute
with
the
SEC.
Liability
shouldn’t
depending
on
what
what
court
you
get
sued
in
or
what
judge
is
assigned
to
your
case.
Earlier
today
we
filed
a
notice
in
our
enforcement
case
against@SECGov
about
Judge
Jackson’s
decision
in
the
case
against
Binance.
This
decision
squarely
rejected
the
SEC’s…pic.twitter.com/j41nsvVzDq
—
paulgrewal.eth
(@iampaulgrewal)July
1,
2024
In
a
strongly
worded
letter,
Coinbase’s
attorneys
accused
the
SEC
of
engaging
in
arbitrary
rule-making
without
a
consistent
framework.
They
argued
that
the
SEC
“has
never
coherently
explained”
its
regulatory
process
but
is
attempting
to
impose
it
retroactively
on
the
digital
asset
industry
through
what
they
describe
as
a
“scorched-earth
enforcement
campaign.”
This
legal
maneuver
comes
on
the
heels
of
Coinbase
filing
a
lawsuit
against
both
the
SEC
and
the
Federal
Deposit
Insurance
Corporation
(FDIC)
on
June
27.
The
exchange
alleges
that
these
agencies
conspired
to
keep
the
crypto
industry
out
of
the
banking
sector
and
failed
to
comply
with
the
Freedom
of
Information
Act
by
not
providing
documentation
related
to
their
rulemaking
deliberations,
particularly
concerning
Ethereum’s
transition
to
a
staking-based
ecosystem.
Coinbase’s
Chief
Legal
Officer,
Paul
Grewal,
has
highlighted
a
significant
discrepancy
in
the
judicial
treatment
of
crypto
transactions.
He
pointed
out
that
two
district
courts
analyzing
“economically
identical
transactions”
of
the
two
biggest
US
exchanges
have
reached
diametrically
opposite
conclusions
on
whether
these
transactions
qualify
as
securities
transactions.
Grewal
emphasized
that
liability
shouldn’t
depend
on
which
court
is
hearing
the
case
or
which
judge
is
assigned
to
it.
The
exchange
is
now
requesting
an
interlocutory
appeal,
citing
“substantial
grounds
for
differences
of
opinion”
on
whether
the
Howey
Test
should
be
applicable
to
crypto
transactions
in
the
secondary
market.
This
move
references
not
only
the
Binance
case
but
also
Judge
Analisa
Torres’s
opinion
in
the
Ripple
vs.
SEC
lawsuit,
which
established
that
secondary
sales
of
XRP
did
not
constitute
sales
of
unregistered
securities.
These
legal
challenges
come
against
a
backdrop
of
evolving
political
and
regulatory
attitudes
towards
cryptocurrencies
in
the
United
States.
The
rapid
approval
of
spot
Ether
exchange-traded
funds
in
May
signaled
a
more
accommodating
regulatory
stance,
boosting
market
confidence.
Additionally,
the
House
of
Representatives
passed
the
21st
Century
Act
(FIT21)
with
bipartisan
support,
aiming
to
clarify
the
role
of
government
agencies
in
regulating
digital
assets.
However,
challenges
persist.
The
cryptocurrency
industry
continues
to
grapple
with
regulatory
uncertainty,
leading
some
blockchain
entrepreneurs
to
relocate
overseas.
The
recent
SEC
complaint
against
Consensys,
accusing
it
of
operating
as
an
unregistered
broker
and
engaging
in
the
sale
of
unregistered
securities,
further
underscores
the
ongoing
regulatory
challenges.
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Author: Oliver Dale
