Prominent attorney Jeremy Hogan has likened the SEC’s opposition to the Coinbase case to its tactics in the Ripple case, where it attempted to sidestep state “Blue Sky” laws predating the SEC’s formation.
The SEC’s Coinbase opposition brief, just like in the Ripple case, tries to run away from the State “Blue Sky” laws which pre-dated the legislation establishing the SEC.
Problem is, the Howey case itself explicitly pulls from and states that the State case authority is relevant. https://t.co/pBFIVeCSJu pic.twitter.com/M351j8CevG
— Jeremy Hogan (@attorneyjeremy1) July 8, 2023
In an escalating dispute with the United States Securities and Exchange Commission (SEC), Coinbase Chief Legal Officer (CLO) Paul Grewal has accused the regulatory body of disregarding four crucial points in its lawsuit against the crypto exchange.
This conflict stems from the SEC’s June 6 claim that 13 cryptocurrency assets traded on Coinbase are classified as “securities,” thus implying the platform is operating as an unregistered securities exchange and broker. Coinbase disputed this in a June 29 filing, arguing that the SEC lacks jurisdiction over the exchange’s cryptocurrencies and requested the regulator to clarify its stance.
Recently, the SEC responded to Coinbase’s late June filing, leading to another round of dissatisfaction from the crypto exchange. Grewal outlined four main shortcomings in the SEC’s case. Firstly, he criticized the SEC for ignoring the Supreme Court’s stance on the Howey test, which defines an investment contract. According to the court, an asset must entail enforceable rights against the issuer to be considered an investment contract.
The second point accuses the SEC of disregarding public interest in their lawsuit. Grewal argued that if the SEC’s claims held weight, it should not have allowed Coinbase to operate for the past two years. He stated that the SEC failed to contemplate how its lawsuit would affect the public and whether its consequences would uphold the agency’s consumer protection standards.
Thirdly, Grewal points out the SEC’s apparent contradiction in its stance. He highlighted the testimony of the agency’s Chair to Congress, stating that no existing regulatory structures apply to cryptocurrency exchanges like Coinbase. Grewal maintains that these matters, among others, should be resolved promptly as a principle of law. He advocated for most of these issues to be decided as a matter of law. Meanwhile, the SEC appears to agree as it continues to assert its jurisdiction within the cryptocurrency industry.
