Coinbase, the leading cryptocurrency exchange, is gearing up for a legal battle against the Securities and Exchange Commission (SEC) as it plans to file an order seeking dismissal of the lawsuit on August 4. The exchange’s Chief Legal Officer, Paul Grewal, expressed unwavering confidence in their ability to win the court case brought by the regulator.
During Coinbase’s second-quarter 2023 earnings call on August 3, Grewal assured investors and the community that they firmly believe in their victory. He stated, “With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win.”
The SEC filed a lawsuit against Coinbase on June 6, alleging that the exchange sold unregistered securities and operated as an unregistered securities exchange. In response, Coinbase will file a motion requesting the court to dismiss the lawsuit entirely on August 4. Grewal emphasized that they will argue that Coinbase did not list securities on its platform, and the SEC lacks regulatory authority over crypto exchanges. Furthermore, the SEC never indicated to Coinbase any requirement to register when they declared Coinbase’s registration statement effective in April 2021.
The exchange’s legal team expects the court to fully consider their arguments at the end of October, following the submission of a comprehensive brief laying out their case.
Grewal clarified that their primary objective is not only to win the lawsuit but to achieve regulatory clarity. Coinbase aims to engage with the SEC and the U.S. government to bring clear guidelines for the crypto industry. At present, the conflicting messages from different regulatory authorities create uncertainty for market participants.
To illustrate this ambiguity, Grewal pointed out the contrasting statements made by SEC Chair Gary Gensler and Commodity Futures Trading Commission Chair Rostin Behnam regarding the legal status of Ether. Behnam referred to ETH as a commodity in a Senate hearing in March, while Gensler has previously asserted that all cryptocurrencies, except Bitcoin, are securities.
The rapidly evolving cryptocurrency space operates under laws that were established long before the Internet era, leading to confusion and legal uncertainties. Coinbase seeks to change this status quo and promote regulatory clarity in the U.S. crypto market.
Regardless of the outcome of the upcoming motions and court cases, Coinbase’s overarching goal remains focused on achieving regulatory clarity for the entire industry. For them, true victory lies in bringing clear guidelines that will benefit not only their platform but the entire cryptocurrency ecosystem.