Senator Cynthia Lummis Accuses US SEC of Overreach In Coinbase Case

Wyoming Republican Senator Cynthia Lummis has filed an amicus brief in Coinbase’s legal fight against the U.S. Securities and Exchange Commission (SEC). The filing was made to the U.S. Court of Appeals for the Second Circuit in connection with Coinbase’s appeal of the US SEC’s enforcement action against the exchange.

The SEC had sued Coinbase for allegedly running an unregistered trading platform, as well as an unregistered broker and clearing agency.

Senator Cynthia Lummis Says SEC Undermines Congress in Coinbase Lawsuit

In a recent brief, Senator Cynthia Lummis criticized the SEC for going beyond its mandate under the former chair, Gary Gensler. According to Lummis, the SEC’s actions went against Congress’s mandate in regulating cryptocurrencies. She also accused the agency of using its regulatory power to re-interpret securities laws and go after digital asset trading platforms without an act of Congress.

Lummis stressed that the role of Congress is to provide a clear legal framework for the regulation of digital assets in legislation. She stated that the SEC’s approach to regulation was unconstitutional. It violated the checks and balances between the legislative and executive branches.

This comes only days after Senator Cynthia Lummis was voted to head the Senate’s Digital Assets Subcommittee. She wants to set guidelines on cryptocurrencies and make Bitcoin part of the financial system in the United States. Senator Cynthia Lummis stressed that the country should act quickly to retain the leading position in financial innovation.

Legal Background of The Case Against Coinbase

In 2023, the SEC brought a lawsuit against Coinbase alleging the company was operating as an unregistered exchange, broker and clearing agency. The top crypto exchange, called for the dismissal of the SEC lawsuit, accusing the regulator of overreaching in its application of securities laws. The case was since transferred to the U.S. Court of Appeals after a district court granted Coinbase the permission.

In her brief, Senator Cynthia Lummis claimed that what the SEC was doing was a form of “legislation by enforcement.” She pointed out that it is Congress, not the US SEC, that can define crypto regulations.

However, despite the ongoing SEC lawsuit, the top crypto exchange continues its global expansion. Coinbase secured a VASP license in Argentina, reinforcing its commitment to regulated growth. Matías Alberti will lead operations, aiming to strengthen the platform’s presence in the region.

Judicial Oversight on SEC’s Authority

Additionally, Lummis highlighted the need for the judiciary to intervene in cases involving the SEC’s enforcement of digital asset regulations. She stressed that the Second Circuit Court should provide clarity on when digital assets qualify as securities. This ruling, according to Senator Cynthia Lummis, could have effects on ongoing cases, including lawsuits against other exchanges.

The brief also noted that the Congress is in the process of drafting legislation that will help solve the issues. Senator Cynthia Lummis pointed to her work with Senator Kirsten Gillibrand on a bill that would help to define the jurisdictions of the SEC and the CFTC with regard to cryptocurrencies.

With Gary Gensler leaving the office of SEC Chair, the agency’s approach to regulating crypto is likely to change. Recently, the Acting Chair, Mark Uyeda unveiled plans to form a new crypto task force to work towards achieving reasonable crypto regulations.