The world of cryptocurrency has been experiencing a roller coaster ride lately, with market fluctuations and regulatory challenges causing significant turbulence. The last week left investors anxious and frustrated following the collapse of SVB, forcing USDC stablecoin to depeg. However, as the market recovers, several crypto firms have again switched their attention to SEC’s crypto crackdown. In the SEC v. Wahi insider trading case, Coinbase has submitted an amicus brief urging the court to dismiss the lawsuit. The company argues that instead of pursuing misguided securities lawsuits, the U.S. Securities and Exchange Commission should prioritize developing proper rules and guidance related to securities.
Coinbase Calls For Regulatory Clarity On Insider Trading Case
On March 14, Coinbase’s Chief Legal Officer, Paul Grewal, took to Twitter to reveal that the company had submitted an amicus brief in the SEC v. Wahi case. The brief supports the dismissal of what Coinbase deems to be a misguided lawsuit by the SEC.
According to an amicus brief submitted by Coinbase, the digital assets listed on the platform are not securities. However, the company would be interested in listing securities if given proper guidance and rules by the Securities and Exchange Commission (SEC). The brief also mentions that the SEC’s willingness to collaborate with the exchange in a constructive manner has been limited. However, Coinbase is reportedly developing a plan to enter the crypto securities market and offer securities.
The firm stated, “Coinbase doesn’t list securities, but we would like to. We even petitioned the SEC to begin rulemaking on this issue last year. We put forward 50 questions that would need to be answered for us to list securities – we haven’t heard back on any of them.”
SEC Continues To Focus On Misguided Lawsuits
Coinbase has criticized the U.S. Securities and Exchange Commission (SEC) for prioritizing misguided lawsuits over developing proper rules or registration options. The company acknowledges the validity of the insider trading and wire fraud charges brought by the U.S. Department of Justice against Ishan Wahi but disputes the securities fraud charges. In addition, Coinbase argues that the assets listed on its platform are not securities and that the SEC is focusing on a matter that should be addressed through criminal prosecution rather than civil litigation. As a result, Coinbase has requested that the lawsuit be dismissed.
The brief says, “Such behavior is improper for a government agency, and is irreconcilable with due process concerns. The SEC’s motive, then, is merely to backdoor a precedent that can be used in other cases, as, indeed, it is already doing in other cases where the DOJ has brought an action, and the SEC has piled on with similar allegations of securities laws violations against absent third parties.”
The Blockchain Association trade group also submitted an amicus brief in mid-February in the SEC v. Wahi case. In the brief, the group contended that the SEC’s previous approach of regulation by enforcement had created a murky and perplexing environment for the digital assets industry to conduct business in the United States.
Coinbase made a similar argument to the Blockchain Association, asserting that the SEC has not provided clear guidance, has significantly departed from its previous statements and has previously disregarded petitions submitted by Coinbase.
The brief states, “Proceeding with enforcement in these circumstances violates bedrock principles of due process and fundamental fairness, which bar an agency from seeking to punish regulated parties without providing the regulatory clarity necessary to discern their legal obligations.”
The company’s actions have been welcomed by many in the cryptocurrency community, who have long been calling for more clarity and consistency in regulatory frameworks. The lack of clarity in regulations has been a major barrier to the growth and adoption of cryptocurrencies. Many investors and businesses hesitate to enter the space due to regulatory uncertainty.