Coinbase, one of the largest cryptocurrency exchanges, has taken legal action against the Securities and Exchange Commission (SEC) after months of waiting for a response to their petition for regulatory clarity. Coinbase submitted a petition to the SEC in July of 2022, hoping for the SEC to establish clear regulations for the cryptocurrency industry. Coinbase recognizes the need for rules to be in place so they can comply accordingly. However, after being ignored for eight months, Coinbase has decided to escalate the matter by filing suit against the SEC on Monday. This legal action is a significant move in the cryptocurrency industry, where regulatory clarity is crucial for businesses to operate lawfully.
The SEC is legally obligated to respond to rulemaking requests within a reasonable timeframe. However, they have demonstrated through various actions, including enforcement campaigns, a recent threat against Coinbase, and the recent testimony of the SEC Chair to Congress, that it has no intention of conducting the rulemaking that Coinbase has requested.
Now, Coinbase’s legal team requests a writ forcing the SEC to act on Coinbase’s rulemaking petition to clarify the cryptocurrency industry. Coinbase is not asking the Court to direct the SEC’s response; it only wants the SEC to respond promptly. According to Coinbase’s Mandamus Petition, “this Court should issue a writ of mandamus instructing the SEC to respond to Coinbase’s rulemaking petition within seven days.” The SEC has shown a pattern of intending to deny the petition but has not yet announced its decision, which has caused an unjustified delay in judicial review at a crucial time for the industry.
Paul Grewal, Coinbase’s chief legal officer, noted that although this activity is not related to the Wells Notice served to them by the SEC, it is undoubtedly part of their growing defense strategy. “We’re not going to court lightly,” Grewal said. “Because we’re convinced the SEC is violating the law, we feel like we have no choice but to take them to court.”
This is going to be good.
