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Amid the ongoing legal battle between Coinbase and the Securities and Exchange Commission (SEC), Paul Grewal, the Chief Legal Officer of Coinbase, made a series of statements on Wednesday.
Grewal, in a post on X, emphasized that the SEC’s claims of having broad authority over all investments lacked a clear defining principle for what constitutes an investment contract.
Coinbase’s take on investment contracts
He asserted the vagueness of the SEC’s stance as the legal battle with the regulator heats up. His assertion questions the SEC’s regulatory scope and suggests that defining such boundaries should be the responsibility of Congress, not the SEC.
Grewal said, “The SEC cannot unilaterally expand and redefine its own regulatory ambit. This should be left up to Congress and the ongoing legislative discussions about regulatory frameworks that are currently taking place.”
Today we made arguments in our motion to bounce the @SECgov suit against @Coinbase. After hours and hours, this much remain clear: the SEC continues to claim broad authority over all investments while offering no limiting principle to its definition of investment contract. 1/4
— paulgrewal.eth (@iampaulgrewal) January 17, 2024
From the legal officer’s statement, Coinbase’s stance is clear: they do not offer securities. Grewal expressed confidence in their legal arguments and anticipates a decision that will bring clarity to the industry. His statements project the legitimacy of Coinbase’s operations and their alignment with current regulatory standards.
While Grewal expressed gratitude to the court, he also hoped for a favorable outcome at the end of the lawsuit.
Exchange could gain ground
On Wednesday, U.S. Judge Katherine Polk Failla reportedly presented a challenge to the SEC’s approach, potentially giving Coinbase an advantage in the hearing. Judge Failla’s demand for the SEC to articulate specific features that categorize a token as an investment contract underscored the ambiguity in the SEC’s current definitions and descriptions, particularly concerning staking.
This legal debate comes in the wake of the SEC’s previous action against Kraken Exchange for what it deemed an investment offering related to staking. Kraken settled with the SEC for $30 million in the first quarter of 2023. The outcome of this ongoing case between Coinbase and the SEC is poised to have significant implications for the cryptocurrency industry, potentially setting precedents for how crypto assets, especially those involving staking, are regulated in the United States.
Also Read: Coinbase SEC lawsuit takes new twist with early rebuff to regulator
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