Coinbase CLO Challenges Court Ruling In SEC vs Crowd Machine Lawsuit

Coinbase and the U.S. Securities and Exchange Commission (SEC) are currently engaged in a legal battle. Amid the court battle, Coinbase CLO Paul Grewal criticized the recent court ruling for a lawsuit by the SEC against Crowd Machine. This led to a renewed battle on whether tokens should be considered securities or not.

Coinbase CLO Stands Firmly Against Ruling In SEC’s Favor

Grewal opposed the court’s ruling in SEC’s favor in the lawsuit against the issuer of Crowd Machine Compute Tokens. He underscored that the tokens and securities dispute has begun again. Quoting Lawyer Bill Hughes’ tweet about the SEC’s latest lawsuit, the Coinbase CLO questioned, “So the tokens themselves are once again the securities?”

In addition, he highlighted the comments made in front of a Southern District of New York judge last week. He questioned if the comments filed by Coinbase in an open court were “false” since the latest court judgment sided with the SEC while the SDNY ruling is still pending. However, Grewal went on to deem the defendants in the latest case as “fraudsters.”

On the contrary, he further added that having such defendants doesn’t provide a “license for the government to make false statements in federal court.” Moreover, Grewal noted that such ‘false statements’ could leave the Americans even more confused regarding the regulations. Additionally, the Coinbase CLO cited that deciphering “what the SEC actually thinks the law is” has become worse.

Also Read: Coinbase CLO Challenges US Treasury’s Crypto Mixing Rule, Here’s Why

Inside SEC’s Lawsuit Against Crowd Machine Compute Tokens Issuer

On January 17, 2024, the U.S. District Court in Northern California issued an amended final judgment against Crowd Machine, Metavine, and Founder Craig Sproule, following an SEC case. Thereafter, the defendants were ordered to pay $19.6 million plus $3.35 million in prejudgment interest for an unregistered and fraudulent offering of Crowd Machine Compute Tokens (CMCTs).

The SEC’s complaint alleged materially false statements in connection with the token sale. Whilst, the defendants agreed to judgments permanently urging them from violating antifraud provisions and registration regulations. However, the defendants didn’t admit being guilty.

Furthermore, the ruling also included penalties, such as a $195,000 fine for Craig Sproule. In addition, Sproule faced a prohibition on his future service as an officer or director of a public company. Meanwhile, the Coinbase CLO has cleared his stance that he doesn’t support the accused in the case even though he questioned the decision.

Also Read: Coinbase CLO Fires Back At US GAO’s Concerns On Crypto Evasion Of Sanctions