#Scrutiny cryptocurrency industry turns plus#

In contrast to its suit against Binance, the SEC made no claims that Coinbase engaged in manipulative trading or flouted anti-money laundering rules and offered no smoking (or at least headline-grabbing) internal messages.

#Scrutiny cryptocurrency industry turns plus#

The complaint alleged Coinbase violated securities laws by failing to register as an exchange when (according to the SEC’s analysis) at least 13 of the 200 plus cryptocurrencies it lists are securities and also by offering “staking” services which should themselves have been registered as investments with the SEC. Sure enough, on June 6 (a day after it sued Binance) the SEC filed its threatened enforcement action against Coinbase. “We were never set on court, but we were always preparing for court,” Grewal says.Ĭoinbase’s suit was “a tactical and proactive way” for the exchange to position itself before the SEC had a chance to sue it, observes Rebecca Fike, a partner in the Dallas office of Vinson & Elkins and a former senior counsel at the SEC’s enforcement division. In April, it asked the Third Circuit Court of Appeals to force the SEC to at least respond to its by then nine-month old petition, even if only to deny it, which would open the door to a lawsuit against the agency.

“We got legal threats instead.”Ĭoinbase rushed to the courthouse first. “We asked the SEC for reasonable crypto rules for Americans,” Grewal complained in a company blog post disclosing the SEC notice. Then, this past March 22, the SEC warned Coinbase (in what’s known as a Wells Notice) that it was likely to soon be the target of an enforcement action. The SEC’s response? It simply didn’t respond. The petition rightly pointed out that other jurisdictions, including the European Union, Australia and the United Kingdom, were pushing ahead with regulations designed to meet the needs of the crypto market while protecting investors. That came into sharper public view in July 2022 when Coinbase filed a petition requesting that the SEC start spelling out a regulatory framework for cryptocurrencies, including a definition of what would make one a security, subject to the SEC’s rules. But Coinbase’s relationship with the SEC has deteriorated as the company has become more impatient and adventurous in its offerings and the agency has dragged its feet on regulations, while becoming more crypto-skeptical.