“Coinbase has embraced regulation since we were founded over a decade ago,” the cryptocurrency exchange’s chief legal officer, Paul Grewal, told the United States Congress on June 6. “The SEC [Securities and Exchange Commission] allowed us to become a public company in April 2021, which makes us unique in the crypto industry.”
Coinbase was sued by the SEC for alleged securities law violations on June 6, a day after the agency sued Binance and two and a half months after receiving a Wells notice warning the U.S.-based exchange of possible impending action by the regulator. Coinbase CEO Brian Armstrong said at the time:
“A Wells notice at this stage, when there’s not a clear rule book, is not constructive.”
Coinbase has promised a vigorous defense against the SEC charges. “We are confident in our facts and the law,” Armstrong said in a tweet June 6.
The company released a video it called “By the numbers” the same day. In it, the company said it mentioned staking 57 times in the S1 report it filed with the SEC before its initial public offering. Coinbase’s staking program is a major alleged securities violation in the SEC suit.
Furthermore, Coinbase “met with the SEC in 2022 asking for guidance” 30 times, the new video claimed. It also filed a petition for rulemaking on staking in March.
1/20— Adam Cochran (adamscochran.eth) (@adamscochran) June 6, 2023
Breakdown of the SEC Coinbase complaint:
Advocates that since 2019 it's been an unregistered broker (odd year to pick?)
What changed in 2019 versus prior years?
Also claims its a clearing agency - which is a stretch here. pic.twitter.com/YItxU5zn9d
Grewal pointed out in his June 6 appearance before the House of Representatives Committee on Agriculture that Coinbase is not currently unregulated. It is a registered money services business with the Treasury Department, and Coinbase Asset Management is a registered investment adviser with the SEC and a licensed designated contract market regulated by the Commodity Futures Trading Commission.
Coinbase also has money transmission licenses in 45 states. Be that as it may, 10 states joined together to issue a Show Cause Order against Coinbase, also on June 6, giving the exchange 28 days to show why those states’ regulators should not issue a cease-and-desist order against it for securities law violations.