Coinbase Takes Legal Action Against SEC’s Lack of Response to 2022 Petition
- Coinbase is taking the U.S. securities regulator to court in order to receive a yes or no response to a rulemaking petition it filed back in July 2022.
- In its petition, the exchange asked for clearer regulatory guidelines for the crypto industry, and answer to 50 specific questions regarding digital assets.
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Popular crypto exchange Coinbase has filed a lawsuit against the Securities and Exchange Commission (SEC) in a bid to get a yes or no response to a petition it filed back in July 2022, the company said in a blog post on 24 April.
According to the announcement, Coinbase had petitioned the SEC in 2022 aksing it to provide clearer regulatory guidelines for the crypto industry in the U.S., and asked the financial regulator to answer a total of 50 specific questions about the regulatory treatment of certain digital assets. These questions included asking the SEC to provide clarification about how it goes about classifying tokens as securities.
Since the petition was filed, Coinbase has received no response, and the exchange has now taken legal action to compel the SEC to provide a response. According to Coinbase’s chief legal officer, Paul Grewal, the SEC’s lack of response implies that the regulator has already made up its mind to deny Coinbase’s petition.
The suit filed by Coinbase is a writ of mandamus, a type of lawsuit for “exceptional circumstances” in which a court can force federal officials to act. Coinbase’s lawsuit comes amid increased scrutiny of the cryptocurrency industry by regulators in the United States. The SEC has engaged in several enforcement actions against crypto companies, including an investigation into Coinbase itself.
In response to this growing hostility, Coinbase has signaled its intention to move part of its operations elsewhere. On 19 April, the exchange received a license to operate in Bermuda and is reportedly seeking to launch a derivatives exchange there as soon as this week. It remains to be seen how the SEC will respond to Coinbase’s legal action and what impact this will have on the wider cryptocurrency industry in the United States.
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- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
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