During a House Agriculture Committee hearing, Paul Grewal, chief legal officer at Coinbase, explained the suspension of crypto exchanges by the US Securities and Exchange Commission (SEC). Despite months of discussions about Coinbase’s registration with the agency, Grewal revealed that the SEC did not provide a response or counter-proposal. This revelation came shortly after the SEC charged Coinbase for failing to register with them.
The SEC’s legal action against Coinbase follows their assessment that the platform was operating as an exchange, broker, or clearing agent without proper registration. These developments are outlined in a press release issued by the regulatory agency. Adding to Coinbase’s challenges, a multi-state task force consisting of Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin targeted exchanges for alleged securities law violations. The task force claims that Coinbase’s staking rewards program must be properly registered in Alabama.
Expressing their commitment to protecting both consumers and investors, Alabama Securities Commission Director Amanda Senn emphasized the importance of expanding legal protections for those investing in decentralized finance. Senn stated that this action aims to ensure that individuals involved in crypto asset products receive equal legal protection and are fully aware of the associated risks.
Coinbase CEO Brian Armstrong took to Twitter to address the allegations filed against the company by the SEC. Armstrong criticized “regulation with an enforcement approach”, which he argued was detrimental to the United States. Affirming Coinbase’s willingness to seek legal clarity, Armstrong said they would turn to court if necessary.
In summary, Coinbase’s chief legal officer highlighted the SEC’s denial response after months of registration discussions, while the SEC and state regulators are taking legal action against the exchange. Coinbase’s CEO expressed dissatisfaction with the SEC’s approach and confirmed their readiness to seek legal clarity.