Coinbase CFO Paul Grewal has spoken out against the Securities and Exchange Commission’s (SEC) lawsuit against former Coinbase executive Ishan Wahi and two others, stating that the case is misguided and only makes things worse.
Grewal testified before Congress last week about Coinbase’s futile effort to register with the SEC so that it can begin to offer digital asset securities. Coinbase petitioned the SEC last year to begin a rulemaking on this issue and put forward 50 questions that needed to be answered to list securities. However, the company has not received any response.
In a new amicus brief filed in SEC v. Wahi, Coinbase argues that the SEC has focused on actions that distort the legal definition of an investment contract beyond recognition, rather than developing practical, lasting solutions like developing rules or registration options.
Grewal stressed that the rule of law matters, and that the DOJ recognized this when it charged Coinbase’s former employee and his accomplices with wire fraud, but not securities fraud, because the assets at issue are not securities.
SEC v. Wahi is the first insider-trading investigation involving the cryptocurrency market, and the SEC accuses the three defendants of engaging in insider trading, wire fraud, and conspiracy to commit wire fraud.
The SEC has requested that the court find the three defendants guilty of violating federal securities laws, permanently restrain and enjoin them from engaging in cryptocurrency trading, fine them to pay civil penalties, and order them to surrender an amount equal to the illicit proceeds they obtained through trading.
Coinbase says it hopes that its amicus brief will convince the court to reject the SEC’s misguided lawsuit against the three defendants. The company continues to seek practical, lasting solutions to the issue of digital asset securities and looks forward to a response from the SEC on its petition for rulemaking.
