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Highlights
- SEC and Coinbase request to seal documents, citing business risks.
- Judge to decide on sealing case-sensitive financial and strategic data.
- SEC's lawsuit alleges Coinbase operated without proper registration.
The Securities and Exchange Commission (SEC) and Coinbase have filed a joint motion with the Southern District of New York, seeking an order to seal certain confidential information.
This action is sensitive given that both the parties involved claim that the documents in contention contain business information that if disclosed will be detrimental to their respective businesses. The case is based on the accusations made by the SEC that Coinbase participated in activities that should be under securities laws.
SEC and Coinbase Seek Court Approval
The motion to seal documents was made and submitted to Judge Katherine Polk Failla explaining the rationale as to why some documents should not be made public.
From the filing, the information comprises of the detailed financial operations, internal compliance measures, and the strategic business plans that are not disclosed to the public.
The disclosure of such information may lead to the unfair business advantages to competitors or undesirable impact on market behavior.
We thought you might find it easier to find our pleadings in SEC v. Coinbase, Inc., 1:23-cv-04738-KPF (S.D.N.Y) if we created a page and kept it updated. So we did. 🙂 https://t.co/MZiVehMkSG
— paulgrewal.eth (@iampaulgrewal) May 21, 2024
Arguments that have been provided by both the SEC and Coinbase indicate that sealing of these documents is crucial to prevent serious prejudice to their operations and also maintain the sanctity of the investigation process. Legal consultants explained that this is a common practice in situations where business secrets may be revealed during the trial.
Background of the Case
The SEC first filed the lawsuit against Coinbase in June 2023, alleging that the company was functioning as an unregistered broker and exchange. After that, in March when a judge allowed the SEC’s accusation that Coinbase was involved in the unregistered sales of securities to go to trial.
This decision was especially beneficial to the regulator since it enabled the allegations to be tried by the jury. Therefore, earlier this month, Coinbase had requested the SEC to approve a new framework for the regulation of crypto asset securities, citing the fact that the current laws are not well suited for the nature of crypto assets.
This request was however turned down by the SEC which argued that the current frameworks in place are adequate to address issues of investor protection and market integrity. The regulatory body has however been in a rough period with the recent vote to kill passed by the Senate of SAB 121 rule and the pending voting on bills that seek to ease the regulation of cryptocurrencies with the SEC being accused of slowing down innovation.
Read Also: Spot Ethereum ETF: When Is Launch Timeline If SEC Gives Approval?
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