After a protracted silence and vague responses from the United States Securities and Exchange Commission, cryptocurrency company Coinbase filed an official request in federal court on Saturday.
“We couldn’t wait until our deadline next week to address the SEC’s response to the June 6 order from the Third Circuit,” tweeted Paul Grewal, Chief Legal Officer for Coinbase. “It is unusual for the government to defy a direct question from a federal court.”
“The SEC’s evasive response goes further, as we set out today,” he added.
We couldn’t wait until our deadline next week to address the SEC’s response to the June 6 order from the Third Circuit. It is unusual for the government to defy a direct question from a federal court. But the SEC’s evasive response goes further, as we set out today. 1/5 pic.twitter.com/ssULmUpzi2
— paulgrewal.eth (@iampaulgrewal) June 17, 2023
According to the Coinbase filing, the company is requesting “mandamus,” which refers to a court order issued by a higher court to a government agency, commanding them to perform a specific action or duty that they are legally obligated to do.
In layman’s terms, Coinbase is asking a federal judge to force the SEC to set clearer rules and standards for the digital assets industry–the objective of a petition made by the crypto exchange last year.
Although the SEC never responded to that petition, it sued the cryptocurrency company earlier this month alleging that it failed to register as an exchange, clearing house, and broker, despite providing investors these services. The lawsuit also claims that Coinbase sold unregistered securities on their platform.
A judge took note of the SEC’s action against Coinbase, and ordered the federal regulator to respond to the petition. In response, Coinbase said it was still considering what actions it might take.
“The Commission’s refusal to say how much additional time it needs to act on Coinbase’s petition confirms that further delay is futile,” tweeted Grewal, saying, “At a minimum, the Court should order the Commission to report on Its action.”
Coinbase had some incendiary rhetoric for the SEC, saying it “pushes the limits of cognitive dissonance” by demanding compliance with non-existent rules.
The commission, led by chairman Gary Gensler, has insisted that clear rules already exist. Even so, the agency has been in the news recently, requesting that the courts deny Coinbase’s request for clearer rules.
Coinbase has been steadfast and relentless over its quest for a definitive regulatory scheme, although they have said in the past that the SEC has no intention of establishing one. Saturday’s filings reiterated that stance, the crypto exchange saying the agency has been “inconsistent” in creating, in fact, a “Catch-22” for the industry.
Although Gensler has said that the SEC “stands ready to help,” their actions suggest otherwise.
