Cryptocurrency Exchange Coinbase Files Lawsuit Against SEC

The American cryptocurrency exchange Coinbase has filed a lawsuit against the Securities and Exchange Commission (SEC) that would compel the regulator to respond to the company’s prior petition.

The SEC has recently adopted a stricter approach towards the cryptocurrency industry, believing that most companies are violating securities laws without providing clear regulatory policies.

The SEC must provide a yes or no answer

Coinbase has filed a motion for a court order requiring a lower court, government, or public official to fulfill its legal obligation, against the SEC at the U.S. Court of Appeals, asking the agency to respond to the rulemaking petition submitted in July 2022.

The cryptocurrency exchange requested the SEC in the summer of 2022 to propose and adopt rules for regulating securities offered and traded through digital means.

Several months later, the American regulatory body has yet to respond to Coinbase’s petition, and in the latest lawsuit, it is stated that the SEC has ‘unreasonably delayed’ taking action.

In a blog post by Coinbase’s Chief Legal Officer Paul Grewal, the securities regulator could reject the company’s rulemaking petition, judging by the latest enforcement action and SEC’s statement. However, the cryptocurrency exchange wants the Commission to announce its decision.

Coinbase previously received a Wells notice from the SEC, stating that the company may have violated securities laws. Although the cryptocurrency exchange claimed it has not violated any laws, it is prepared to go to court with the SEC.

In the meantime, Coinbase has stated that the company could leave the U.S. if regulatory policies towards cryptocurrency companies are not clarified. The company recently obtained a Bermuda license, hinting at plans for global expansion.

Gensler believes that cryptocurrency companies are violating the law

Coinbase also noted that the SEC, chaired by Gary Gensler, is enforcing measures against cryptocurrency companies instead of providing regulatory clarity. The company’s CEO Brian Armstrong recently stated that the agency’s ‘war-like’ approach has caused ‘incalculable harm’ to the United States.

Gensler’s crackdown on the cryptocurrency sector has also prompted U.S. Congressman Warren Davidson to announce plans to introduce new legislation to remove the SEC chief from his position. According to Davidson, Gensler’s removal will correct a ‘long history of abuses.’

However, the SEC chairman stated that the Commission will not change its approach, emphasizing that cryptocurrency companies must comply with existing laws.