On the evening of June 6, the U.S. Securities and Exchange Commission (SEC) fired again, suing the U.S. compliant encryption trading platform Coinbase in New York Federal Court for violating U.S. securities trading rules.
Afterwards, Coinbase also responded to the SEC saying that the key to solving the problem lies in legislation, not litigation. In the absence of clear regulatory rules, the SEC’s enforcement actions have harmed U.S. economic competitiveness and companies like Coinbase that have a clear commitment to compliance.
As the general of the Chinese army who faced the SEC directly in the Coinbase camp this time, Chief Legal Officer Paul Grewal emphasized his determination to will to fight the SEC to the Supreme Court, and Coinbase will win the lawsuit, while also expressing his determination on personal social accounts and media. In the interview, another lawsuit was repeatedly raised (Coinbase took the initiative to sue the SEC), which seemed to be the winner to reverse the situation.
According to Emily Meyers, General Counsel of Electric Capital, the lawsuit can be traced back to July 2022 at the earliest.
At that time, Coinbase had submitted a petition to the SEC on the establishment of regulatory rules, asking the agency to provide necessary regulatory guidance for the cryptocurrency industry.
Nine months have passed without any response from the SEC.
In May 2023, Coinbase filed a lawsuit against the SEC to the U.S. Court of Appeals for the Third Circuit, requiring the SEC to respond to the petition within a reasonable time based on the Administrative Procedure Act—“Give me a letter of approval, Are you going to do it or not!
Coinbase reasoned that, based on sound administrative rulemaking procedures, if the SEC had reached a decision on the issue (regardless of whether the answer was yes or no), it would have to respond to the petition, especially if the answer was Otherwise, the public will never be able to exercise their right to ask the courts whether the agencys decision was appropriate.
However, before the Third Circuit Court of Appeals had time to make a ruling, the SEC backhandedly took Coinbase to the New York federal court yesterday.
In the early hours of this morning, the Third Circuit Court of Appeals issued a document stating that it has noticed that the SEC has filed lawsuits against Coinbase and other exchanges, and therefore requires the SEC to respond within 7 days on whether it has decided to reject Coinbases petition, specifically The SEC needs to answer the following three questions:
Has the SEC now decided to reject Coinbases petition?
If not, how much time will it take for the SEC to decide whether to approve or deny?
Why shouldnt this court retain jurisdiction (SEC went to New York federal court)? And follow Coinbases suggestion to require regular reporting, and set a deadline? If the SEC has not yet decided to grant or deny, the court will rule on Coinbases pleadings.
Regarding the request issued by the Third Circuit Court of Appeals, Paul Grewal immediately took a rainbow fart, saying that it not only related to the cryptocurrency industry, but also showed the normal operating procedures of government agencies and the correct way to interact with the public.
Paul Grewal seems to be prepared for the various potential responses from the SEC.
In a personal tweet, Paul Grewal wrote:
If the SEC hadnt decided to reject the petition, then the SEC shouldnt be suing us and the industry as it is now, because legislative or regulatory rules should precede specific enforcement actions.
If the SEC has decided to deny the petition, Coinbase has the legal right to ask them to explain why, and also has the right to challenge it. Coinbase is going to be asking some very serious questions.
In short, Paul Grewals logic now is that I have been seeking compliance, but you have never answered me:
If you dont think about whether to make rules, dont sue as soon as you come up. You dont even have specific rules. How can you say that I violated the rules?
If you decide not to make rules, then why? I desperately seek to supervise you but you ignore me, I want to ask you what you do as a regulator.
So far, no one can predict how the SEC will respond to the Third Circuit Court of Appeals, nor can it predict which direction this confrontation will develop. But it is not difficult to see that the lawsuit filed by Coinbase in April this year has won some initiative for itself to a certain extent, and this slight shift in the balance may also have a profound impact on the final judgment of the lawsuit last night.
In addition, another point that can be confirmed is that from the perspective of the whole industry, no matter which direction the situation itself will develop, the contradictions surrounding supervision will inevitably promote the improvement of supervision itself. Looking at the longer-term future, the current disputes may be just the pains leading to a new stage.
Long live crypto。
