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Coinbase shares dropped 3.23% to trade around $59.20 as Bitcoin slipped below $27k again.
Crypto companies in the United States have struggled to get regulatory clarity from the Securities and Exchange Commission (SEC). As a result, most crypto-related companies in the United States have opted to focus overseas for future growth prospects. Moreover, other leading markets like European countries have already enacted clear crypto rules that have significantly favored mainstream adoption. Nevertheless, crypto companies in the United States led by Ripple Labs and Coinbase Global Inc (NASDAQ: COIN) have been at the forefront in pushing for clear regulations in place of enforcement. Already, Ripple has indicated that more than $200 million has been spent in fighting the SEC in the lawsuit against XRP programmatic sales.
Coinbase Taps on Judicial System to Fight the SEC in the United States
As the largest publicly traded crypto exchange, Coinbase has been under the radar of the United States financial regulators for a long time. However, Coinbase scrutiny by the SEC significantly increased after the fall of FTX and Alameda Research. In the latest developments, the crypto exchange through its legal department filed a reply in the third circuit to the SEC’s argument against a petition for a writ of mandamus.
According to the company’s chief legal officer Paul Grewal, the Mandamus is the tailor-made remedy for the extraordinary facts presented against the SEC. Moreover, the Mandamus is to a greater extent warranted since the SEC has deliberately denied Coinbase’s petition.
Late last night Coinbase replied in the Third Circuit to the SEC’s arguments against our petition for a writ of mandamus. Mandamus is the tailor-made remedy for the extraordinary facts presented here. We continue to appreciate the Court’s consideration. https://t.co/OD02kX3524
— paulgrewal.eth (@iampaulgrewal) May 23, 2023
According to the Coinbase court filing on May 22, the SEC chair Gary Gensler has publicly indicated that there will be no rulemaking on the petition. Moreover, the SEC has ostensibly deliberately ignored other petitions from crypto companies for years.
“The SEC is talking out of both sides of its mouth, and it is wrong at each end. The Chair’s statements cannot provide fair notice of the obligations of regulated parties—that is the function of rulemaking, which Coinbase’s petition requests. But the SEC’s Chair undoubtedly can and does speak authoritatively for the agency he leads in describing its regulatory agenda,” Coinbase noted.
As a result, Coinbase noted that the need for the court’s intervention is much needed to compel the SEC in the rulemaking case. Moreover, the SEC has taken more than ten months in issuing a reply to Coinbase’s claims, thus warranting the mandamus.
In its defense, Coinbase argued that the SEC will carry a minimal burden if it issues a ruling on the petition. On one hand, if the SEC says yes to the petition, the agency will only have to defend the lawfulness of the decision in court. Similarly, the SEC would be required to defend its position in a court of law if it issues a no on Coinbase petition.