A complaint has been filed against the Securities and Exchange Commission (SEC), accusing them of adopting an unclear and ever-changing stance on securities laws. The complaint argues that this lack of clarity deprives regulated parties of the fair notice required by due process, leaving them uncertain about whether their activities will be deemed as securities transactions and subjected to investigation, prosecution, and penalties. As a result, entrepreneurs in the digital asset industry are being forced to relocate their businesses abroad due to the uncertainty created by the SEC’s approach.
This is not the first time that Coinbase, a prominent cryptocurrency exchange, has clashed with the SEC. The two entities are currently involved in two other high-profile cases. In 2022, Coinbase filed a lawsuit against the SEC, seeking a clear regulatory framework for the blockchain sector. In response, the SEC filed its own lawsuit against Coinbase in the following year, alleging violations of U.S. securities law. Both cases are currently ongoing in the legal system.
In the midst of these legal battles, Coinbase’s Chief Legal Officer, Paul Grewal, expressed his criticism of the SEC’s approach to regulating cryptocurrencies. Grewal took to X on Thursday morning to denounce the SEC’s “unlawful” regulation-by-enforcement strategy. He highlighted the various tactics employed by financial regulators to hinder the digital asset industry, with the SEC claiming broad authority without providing any clear or consistent rules. Grewal also pointed out that the Federal Deposit Insurance Corporation (FDIC) pressured financial institutions to sever ties with the industry.
As of now, the SEC has not publicly responded to the litigation.