Tag: Coinbase

SEC’s Coinbase Fight Puts Exchange, Crypto Survival on the Line

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By David Jolly. March 27, 2023. (Bloomberg Law).

The SEC’s decision to target Coinbase Global Inc. for enforcement actions sets the stage for a protracted legal battle that threatens the top US crypto exchange and potentially the entire US digital assets sector, legal and industry analysts say.

Coinbase revealed last week that the Securities and Exchange Commission had served it with a Wells Notice, a notification that the agency is planning to recommend enforcement action for alleged securities law violations. Already reeling from its increasing exclusion from the traditional financial system, the US crypto industry sees the Coinbase action as a signal that the SEC—and its determined chairman, Gary Gensler—intend to regulate the industry out of business.

“It is hard to look at what’s happening at the federal regulatory level and not see it’s an existential threat,” said Sheila Warren, CEO of the Crypto Council for Innovation. “Between challenges around obtaining basic banking services, making payroll, to open hostility from this SEC, operating in the US is not for the faint of heart.”

Read the full article here.

The Crypto Security Debate Goes to Court

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By Paul Kiernan. May 26, 2022. (Wall Street Journal)

WASHINGTON—Investors are asking the courts to decide an existential question for the cryptocurrency industry: whether digital tokens are, for legal purposes, more similar to stocks or to gold.

Attorneys for cryptocurrency-trading platform Coinbase Global Inc. COIN 9.47% filed a motion this month to dismiss a class-action lawsuit arguing that 79 of the tokens listed on the firm’s platform are unregistered securities. 

The group of Coinbase users is demanding reimbursement for trading fees and market losses and seeking to prevent the assets from continuing to trade on the platform. 

Outside of enforcement actions, the Securities and Exchange Commission hasn’t indicated which cryptocurrencies it considers to be securities. But federal statutes passed in the 1930s deputize ordinary investors to help the SEC do its job, by giving buyers of unregistered securities the right to sue the seller for their money back. 

Read the full article here.

Crypto executives urge light touch as Congress mulls new regulation

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By Pete Schroeder and Katanga Johnson. December 8, 2021. (Reuters).

WASHINGTON – Top executives from six major cryptocurrency companies including Coinbase and Circle on Wednesday urged Congress to provide clearer rules for the booming $3 trillion industry, but warned that overly tough restrictions would push it overseas.

The U.S. House of Representatives Financial Services Committee hearing marked the first time the industry’s senior leaders have explained their businesses to U.S. lawmakers amid growing concerns cryptocurrencies may pose systemic risks and hurt investors.

Crypto executives repeated calls for careful, bespoke rules rather than forcing the industry to comply with existing regulations.

Read the Full Article Here.

Waging War on Cryptocurrency Would Be a Mistake for Democrats

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By Former Rep. Albert Wynn (D-MD). November 30, 2021. (Bloomberg Law).

When innovation brings change to an industry, the government’s role is to observe first and then manage the change as necessary. The government should not be an obstacle to progress. The Democratic Party has long been a champion of inclusionary innovation, smoothing the disruption to families and workers while spreading the benefits as widely as possible throughout the economy.

I fear, however, that with the fintech revolution rising through decentralized finance and blockchain technology, some in our party are mobilizing for a war on cryptocurrencies that could be futile and economically costly to the country.

There is wide agreement that regulation is needed for digital assets. There must be strict protections against money laundering and fraud in coin offerings and the financial products emerging in this $2 trillion asset space.

Read the Full Article Here.

Still-young crypto industry could grow stronger — if SEC allows it to thrive

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By Charles Gasparino. September 19, 2021. (New York Post).

The noise surrounding the $2.2 trillion crypto industry often drowns out the reality that we are on the verge of something revolutionary. If things go right, crypto and the blockchain technology could usher in the next Internet revolution. 

Things are now going terribly wrong. The US stands the very real chance of killing this business here by driving digital innovation overseas and ceding advancements to other countries including Communist China.

Why? Because our regulators, mainly those at the Securities and Exchange Commission, are either too feckless or too turf-hungry (or a combination of both) to understand the dangers of their asinine approach to overseeing a nascent and important technology.

Read the Full Article Here.

Gensler’s Crypto Mess: It’s Time For Congress To Teach The SEC What “Clarity” Means

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By Jared Whitley. September 16, 2021. (Seeking Alpha).

The U.S. Securities and Exchange Commission (SEC) is playing a ridiculous game with the blockchain and cryptocurrency industry and the millions of investors it claims it’s trying to protect. The agency insists there is “clarity” on the rules it applies to digital assets, but will only communicate them through lawsuits. It tells the best, most innovative U.S. blockchain companies to “come in, talk to us,” and share the details of their product development line under the false pretense of guidance on being compliant, only to slap them with subpoenas instead. Not even the highest-priced securities lawyers can tell these companies what compliance looks like with any certainty. It’s driving exasperated American innovators overseas, and putting our economic future in danger.

If previous SEC Chairman Jay Clayton was the “most conflicted chairman in history”, then Biden’s pick – Gary Gensler – is the most clueless. Ever since he was confirmed he’s been saying that the rules on what makes a digital asset a security are “clear” and that he’s dedicated to “protecting investors”. But ask any retail digital asset investor and you’ll know that nothing is clear and none of them feels protected by Gensler. Quite the contrary, they see Gensler as the danger they need protection from.

It doesn’t even help to register your blockchain enterprise with the SEC to list it on the stock market. Coinbase, the leading crypto exchange platform, went public earlier this year and subjected itself to the full SEC cavity search. It competes with many non-listed blockchain companies offering lending products who haven’t faced any enforcement action from the SEC. Coinbase’s CEO Brian Armstrong shared his proposed lending product with Gensler’s people and they warned him if he started offering it, they’d drag him into court unless he registered the offerings as securities. He asked for guidance on why, and they refused to answer. A Wells notice followed, which is how the SEC warns you a lawsuit is coming. This behavior by the SEC was so shocking that some of Coinbase’s fiercest competitors rose to its defense.

Read the Full Article Here.

The SEC has told us it wants to sue us over Lend. We don’t know why.

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By Paul Grewal, Chief Legal Officer of Coinbase. September 7, 2021.

Last Wednesday, after months of effort by Coinbase to engage productively, the SEC gave us what’s called a Wells notice about our planned Coinbase Lend program. A Wells notice is the official way a regulator tells a company that it intends to sue the company in court. As surprised as we were at the SEC’s threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it.

Background

Coinbase has been proactively engaging with the SEC about Lend for nearly six months. We’ve been eager to hear their perspective as we explore innovative ways for our customers to gain more financial empowerment on Coinbase. Specifically for Lend, we’re seeking to allow eligible customers to earn interest on select assets on Coinbase, starting with 4% APY on USD Coin (USDC). We could have simply launched the product but we chose not to. This is far from the norm in our industry. Other crypto companies have had lending products on the market for years, and new lending products continue to launch as recently as last month. But Coinbase believes in the value of open and substantive dialogue with our regulators. So we took Lend to the SEC first.

What we’ve provided to the SEC

Coinbase’s Lend program doesn’t qualify as a security — or to use more specific legal terms, it’s not an investment contract or a note. Customers won’t be “investing” in the program, but rather lending the USDC they hold on Coinbase’s platform in connection with their existing relationship. And although Lend customers will earn interest from their participation in the program, we have an obligation to pay this interest regardless of Coinbase’s broader business activities. What’s more, participating customers’ principal is secure and we’re obligated to repay their USDC on request.

Read the Full Coinbase Blog Post Here.