Key Takeaways:
- Coinbase answers the Wells Notice the SEC filed a month ago.
- The executives assert the exchange is ready to defend itself if need be.
- SEC Chair Gary Gensler offers a logically malleable analogy instead of clear regulations.
YEREVAN (CoinChapter.com) – Coinbase chief executive Brian Armstrong and chief legal officer Paul Grewel have responded to the Wells Notice filed by the Securities and Exchange Commission (SEC) in late March. The executives explained their position and determination to “fight” the regulator if need be.
Coinbase will defend itself vigorously in litigation if it comes to that. But it does not have to come to that. We will show up at your offices, any day, any time, to discuss a workable path forward for our industry. But we won’t find that path without true dialogue.
Grewel said in his message to the SEC.
SEC took issue with Coinbase despite the latter’s compliance
In detail, the regulator took issue with the staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet after a cursory investigation. However, the exchange cooperated with the SEC prior to launching the services and even filed a rulemaking petition in July 2022 in an effort to get clear regulations in the crypto sector.
Notably, the SEC failed to respond to the petition, prompting the Coinbase CLO to file a narrow action in Circuit Court to compel the SEC to respond “yes or no” to the fundamentally important regulations of the crypto space.
Also read: US Congress raises debt ceiling & cuts Government spending after Treasury Secretary Warns of economic catastrophe.
“The rulemaking process exists so that agencies can develop regulation with the benefit of public input, and have their position tested through judicial review. To date, more than 1,700 entities and individuals have submitted comments to Coinbase’s petition echoing the request for clarity.”
noted Grewel on April 25.
Coinbase also asserted that the company will “keep building the most trusted products and services to update the financial system and create more economic freedom in the world.”
“We will defend ourselves and stand up for the rule of law,” concluded Armstrong.
Gensler caught up in rovers and goldfish.
SEC Chair Gary Gensler is a controversial figure in the industry due to his “questionable” motives.
In detail, the official has been largely condemned for his “regulation by enforcement” strategy. Additionally, before the infamous FTX fiasco, the exchange’s CEO, Sam Bankman-Fried, had several meetings with the SEC.
He allegedly discussed FTX’s business strategy with Gensler and proceeded with his “blessing.”
However, in the latest issue of Gensler’s Office Hours, the Chair reiterated his perception of crypto assets as securities, hence, subject to securities laws. He offered the analogy of claiming your rover is a goldfish to avoid the consequences of not walking the dog on a leash when the law clearly states you must.
Meanwhile, the Chair infamously failed to identify what Ether, the second-largest crypto, is.
During the April 18 hearing with the House Financial Services Committee, Chair Patrick McHenry asked Gensler a simple question: Is ETH a commodity or a security? The SEC official failed to give a straight answer, shattering his credibility.
Also read: Republican Presidential Candidate Nikki Haley Says Joe Biden Will Die in Office if Re-Elected.
Circling back, the rover/goldfish analogy is a miss, as the SEC did NOT provide clear guidance and laws, even when Coinbase formally petitioned them to do so. As veteran investor Peter Brandt put it, “Gensler is NOT a champion to protect the interest of individual investors. He is a pawn of big banking and brokerage.”
