Coinbase CEO Demands SEC Apology for ‘Frivolous Cases’ 

• Coinbase criticizes SEC, demanding withdrawal of frivolous cases and an apology.
• Bitcoin surges past $71K, relieving anxious traders after consolidation.

Bitcoin hit a three-month high, surging past $71,000 and providing relief for traders weary of the coin’s prolonged consolidation. But alongside this surge, the ongoing legal drama between Coinbase and the U.S. Securities and Exchange Commission (SEC) escalated. Coinbase CEO Brian Armstrong recently voiced strong criticism of the SEC on social media, urging the next chair of the commission to withdraw “frivolous cases” and apologise to the American public.

He suggested this to restore public trust in the regulatory body. His post also raised crucial regulatory questions, such as “Is a digital asset a security?” and “Can the SEC regulate digital asset exchanges?”—pointing to the unresolved regulatory uncertainty in the sector.

Notably in an amicus brief filed on 28 October, Coinbase supported Beba LLC and the DeFi Education Fund in a case against the SEC, criticizing the commission’s “regulation-by-enforcement campaign” against digital-asset companies. The brief accuses the SEC of failing to provide the industry with clear guidelines and argues that, without formal rulemaking, firms find themselves in a compliance “Catch-22.” 

Moreover, Coinbase claimed that when it went public in 2021, the SEC did not object to its listing or the presence of digital assets on its platform. However, Coinbase asserts that the commission has since reversed its stance, with SEC Chair Gary Gensler now deeming most digital assets as securities.

“SEC Lacks Transparency”

Coinbase further argues that the SEC’s approach lacks transparency, stating that “the agency has steadfastly refused to engage in rulemaking,” instead relying on punitive enforcement actions to regulate the industry. The exchange also highlighted its extensive efforts, including 30 meetings with the SEC in 2022 to seek regulatory guidance, only to be met with insufficient responses. Coinbase’s legal petition, initially filed in 2022, calls for regulatory clarity, contending that existing securities laws, designed for traditional assets, are inadequate for the unique nature of digital assets.

The SEC has maintained that current laws are sufficient, citing the Supreme Court’s “investment contract” standard. However, Coinbase’s ongoing case could push for clearer regulation in an industry where rapid technological shifts demand flexible and well-defined rules. This case may have significant implications for the future regulatory framework of digital assets in the U.S.

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