Coinbase CLO Says SEC Has No Plan, No Framework, No Logic, No Due Process, and No Respect for the Law

Coinbase and Ripple CLOs Paul Grewal and Stuart Alderoty took a dig at the US SEC on Friday over the latest move to amend its lawsuit against Binance.

The Chief Legal Officer of leading crypto exchange Coinbase has taken another swipe at the US Securities and Exchange Commission (SEC). In a Thursday post, Paul Grewal asserted that the top regulator had no structure or standardized guidelines for law enforcement.

The Coinbase CLO, a sworn antagonist to the SEC’s incessant clampdown on the crypto exchange, insinuated that the securities watchdog had shown a lack of reverence for the law. This, he noted, was evident in the SEC’s settlement with Isreali-based crypto exchange eToro.

On Thursday, the SEC announced it had settled with eToro, citing the exchange agreed to cut its cryptocurrency offerings and pay a penalty fee of $1.5 million. Per the new operational terms, eToro would offer US investors access to trade only Bitcoin, Bitcoin Cash, and Ethereum.

Grewal Cites Unclear Regulation

Grewal noted that the SEC’s sanctioning of the offering of Bitcoin and Ethereum to US investors points to the regulator’s view of the assets as commodities. However, he stated that the SEC couldn’t elucidate why it classified the aforementioned cryptocurrencies as commodities and other digital assets as securities.

According to Grewal, the SEC couldn’t point to the criteria for its asset classification because the regulator doesn’t have any. The SEC’s unclear benchmark for deeming a crypto asset a security was one of the major points in its years-long legal battle with Ripple.

Notably, the SEC dropped its investigation into the Ethereum Foundation on whether Ethereum was a security after the spot ETF approval in May. In the notification sent, the regulator didn’t confirm if Ethereum was a security or not and has never clarified the sector on the reasons behind its change of intent.

“There is no plan, no framework, no logic, no due process, and certainly no respect for the law,” Grewal emphasized.

Ripple CLO Ridicules the SEC

Stuart Alderoty, Ripple’s CLO, joined forces with Grewal to troll the SEC’s recent move. In a Friday tweet, he called on the US regulatory body to admit it “has become a twisted pretzel of contradiction,” adding a new SEC logo to the X post.

So the SEC finally admits that 1/ “crypto asset security” is a made up term and 2/ to prove a “crypto asset security” is an investment contract, the SEC needs evidence of a bundle of “contracts, expectations, and understandings”?

Think it’s time for @SECgov to admit it has… https://t.co/iJIYTnNvxs pic.twitter.com/E58Pft7irc

— Stuart Alderoty (@s_alderoty) September 13, 2024

The post responded to Grewal’s tag on the SEC’s latest move. In a late Thursday filing, the Gary Gensler-led regulator applied to amend the complaint filed against leading exchange Binance. The SEC sought to correct the use of the term “crypto asset securities,” noting it doesn’t refer to crypto assets as securities themselves.

Grewal cited the SEC’s persistent argument that a crypto asset was a security in itself in previous cases. He then noted that the regulator had misled the court with these claims. 

The regulatory uncertainty in the US has been a long, weighty issue. For this reason, the sector has backed Republican candidate Donald Trump. The former president has promised to change the current regulatory climate, starting with firing Gensler.