SEC vs Coinbase: This latest order may compel the SEC to make a move

• The Third Circuit Court of Appeals ordered the SEC to file a response to the mandamus petition entered by Coinbase.
• In the next ten days, the SEC will have to clarify if it will comply with Coinbase’s request for rulemaking.

A U.S. court ordered the Securities and Exchange Commission (SEC) to respond to the allegations made by American cryptocurrency exchange Coinbase within the next ten days.

Paul Grewal, Coinbase’s Chief Legal Officer, took to Twitter on 3 May to share the latest development in the intensifying legal battle. 

The Third Circuit just issued a text-only order directing the SEC to file a response to our mandamus petition within 10 days (and gave us 7 days for a reply). Here’s the text of the order:

TEXT ONLY ORDER (Clerk) At the direction of the Court, Respondent is ordered to file an…

— paulgrewal.eth (@iampaulgrewal) May 3, 2023

Court orders SEC to explain enforcement of securities laws on digital assets

According to the tweet, the United States Court of Appeals for the Third Circuit issued a text-only order to the SEC. The court, via the order, directed it to file a response to the mandamus petition filed by Coinbase on April 24, 2023.

The petition for writ of mandamus was a follow on a petition addressed to Vanessa Countryman, the Secretary of the SEC. The petition asked the securities regulator to use its formal rulemaking process to provide guidance for the crypto industry. 

Last week Grewal stated that the SEC was required by law to respond to petitions. Additionally, the regulator had to do so within a reasonable amount of time. However, the regulator had not responded in almost nine months.

The lack of response prompted Coinbase to file the mandamus petition last week. This was done to compel the SEC to respond yes or no to its pending rulemaking petition.

Grewal stated that a response from the regulator was extremely essential. This was because it gave the exchange its right to challenge its decision in court. Speaking on the mandamus petition, Grewal stated,

“From the SEC’s public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. But they haven’t told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision.”

The text-only order from the Third Circuit directed the SEC to file a response within ten days. Coinbase will subsequently have seven days to respond to the regulator’s response.

“We appreciate the Court’s careful consideration of this matter,” Grewal added.