Coinbase claims that SEC legal threats penalize transparency and undermine the public listing process
The crypto exchange listed on the Nasdaq stated that the Securities and Exchange Commission appears to be undermining its own function as the watchdog of companies registering to offer shares to the public.
According to Coinbase, the largest cryptocurrency trading platform in the United States, the SEC’s threat to take legal action against the exchange for alleged violation of securities laws is inconsistent with the SEC’s approval of Coinbase’s application, or S-1 document, to sell shares to the public in April 2021.
The comments were made in a 73-page report published by Coinbase’s legal team on Thursday in response to a so-called Wells notice issued by the SEC last month, which warned it was contemplating legal action against the exchange over its cryptocurrency staking services and other products.
Following the collapse of the FTX exchange in November, which filed for bankruptcy amid allegations of investor fraud, the report claims the SEC appears to have adopted a new perspective on cryptocurrency platforms.
FTX is “entirely dissimilar to Coinbase,” Paul Grewal, chief legal officer of Coinbase, said in a Thursday video released alongside the report and featuring the company’s chief executive officer, Brian Armstrong.
Enforcement actions against Coinbase are “not constructive,” Armstrong says in the video. Coinbase filed a lawsuit against the SEC on Monday, requesting that the court compel the regulator to respond to a petition Coinbase filed in July 2022 requesting clearer crypto regulation guidelines.