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Coinbase’s Legal Showdown: SEC Drops Bombshell Minutes Before Congress Hearing on Crypto Legislation

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  • Paul Grewal, Coinbase’s Chief Legal Officer, was notified of the SEC’s lawsuit against his company moments before his testimony on a crypto legislation draft before the House Committee on Agriculture.
  • The SEC accuses Coinbase of operating as an unregistered securities exchange, broker, and clearing agency, raising questions about the timing and motivations behind the lawsuit.

Coinbase’s Chief Legal Officer, Paul Grewal, experienced a jolting revelation just minutes before a significant congressional appointment. The US Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, with Grewal being informed a scant 45 minutes before his testimony on a cryptocurrency legislation draft before the House Committee on Agriculture.

Grewal described the timing of the SEC’s move as “curious” in a recent interview with Bankless. He was taken aback that the regulatory body chose the day of his Congressional testimony to initiate the legal action.

The SEC accused Coinbase, a leading US crypto exchange, of functioning as an unregistered securities exchange, broker, and clearing agency. This bombshell news was followed by Grewal’s testimony on a digital asset framework bill under review by the House of Representatives.

Grewal underscored the importance of this bill, stating,

“The bill is quite crucial. It will establish, for the first time, a genuine market structure for digital assets, encompassing both digital asset commodities and digital asset securities. It paves the way for registration, rigorous oversight, and concrete protections for consumers and investors—factors the industry has been lobbying for over the years.”

In April, Coinbase petitioned the courts to force the SEC to respond to their earlier request for guidance on the digital asset sector. The US Court of Appeals for the Third Circuit has now mandated that the regulator respond to this petition within a week, spurred by the SEC’s lawsuit against Coinbase.

Grewal remains firm in his belief that the SEC’s legal pursuit against the crypto industry, like the case against Coinbase, wouldn’t proceed if the regulator had decided against their petition for rulemaking.

He adds,

“We still maintain that ‘rules of the road’ from legislation or rulemaking must precede enforcement actions. That’s why we petitioned the SEC for rulemaking almost a year ago. If the SEC’s response to our petition for rulemaking is ‘no’, they are legally obligated to tell us, since we reserve the right to challenge that ‘no’ in court. This raises serious questions that demand answers.”

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Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628