In response to the SEC’s arguments against its petition for a writ of mandamus, Coinbase said the financial regulator “is talking out of both sides of its mouth, and it is wrong at each end.” The crypto exchange’s chief legal officer Paul Grewal described the mandamus as “the tailor-made remedy for the extraordinary facts.”
The longstanding dispute between the crypto exchange and the market regulator is at the heart of the battle. Last month, Coinbase sued the SEC, claiming that the latter failed to provide a response as the former sought a formal notice-and-comment process that would enable the public to weigh in. The SEC later responded, deeming Coinbase’s allegations to be “baseless.”
Coinbase vs. SEC
In a 23-page filing to the Third Circuit of the United States Court of Appeals, the crypto exchange said the SEC’s broad enforcement campaign on the same topic posed by Coinbase’s rulemaking petition renders the agency’s delay “unreasonable.”
Coinbase argued that mandamus is warranted and blamed the SEC for “making up its mind” to deny the petition. It also said the Commission’s enforcement actions confirm that it is not considering Coinbase’s Petition.
The filing also cited that the SEC has instituted over 25 digital asset-related enforcement actions since the filing of the petition in July 2022.
“These actions presuppose that the agency believes the securities laws are clear and workable as applied to digital assets and that additional rulemaking is unnecessary. And many of these enforcement actions require the Commission to take positions on the central questions in Coinbase’s rulemaking petition, such as the standard for identifying whether a digital asset is a security.”
Coinbase also hit back at the SEC, saying the latter’s argument that – regulated entities should wait to be sued – ignores its obligations to create significant new legal standards through rulemaking and not enforcement.
SEC’s Earlier Response
After failed attempts to get a response from the SEC about its stance on proposing and adopting rules to govern the regulation of securities that are offered and traded via digitally native methods, a US court ordered the commission to respond to Coinbase’s complaint in ten days.
The Commission then argued that it is under no obligation to issue new regulations and added that Coinbase has no standing to sue the agency. It also said the digital asset industry already has rules and regulations governing it.
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