Coinbase Was Dismissed by the US SEC After Months of Figuring Out How To Register, Chief Legal Officer Says

Coinbase was dismissed by the US Securities and Exchange Commission with no response after months of discussing how to register with the agency, the crypto exchange’s chief legal officer told lawmakers on Tuesday.

Paul Grewal, chief legal officer at Coinbase, faced lawmakers hours after the exchange was charged by the SEC for not registering with it. 

That came after months of talks with the SEC on how to register Coinbase, Grewal told lawmakers at a House Agriculture Committee hearing. 

“We were simply dismissed with no response or any counter proposal or ideas coming back from the SEC,” Grewal said. 

Coinbase was sued by the SEC on Tuesday morning, a day after also bringing charges against crypto exchange Binance. 

The regulator said that Coinbase was operating its platform and was not registered in the capacity of an exchange, broker or clearing agency, according to a press release. 

Stateside

US state regulators also went after Coinbase on Tuesday in a multi-state task force including Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin, according to a press release. 

Alabama’s order alleged that Coinbase violated securities law through its staking rewards program by not registering in the state. 

“The ASC [Alabama Securities Commission] is committed to protecting Alabama consumers and investors, including those who choose to invest in the decentralized finance space,” said ASC Director Amanda Senn. “This action is another step toward ensuring that investors in crypto asset products are offered the same protections under our laws and are fully aware of the risks involved in these investments.”

On Twitter, Coinbase CEO Brian Armstrong responded to the SEC charges, saying that the agency’s “regulation by enforcement approach” is “harming America.”

“So if we need to avail ourselves of the courts to get clarity, so be it,” Armstrong said. 

Regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules.

Remember:
1. The SEC reviewed our business and allowed us to become a public company in 2021.
2. There is no path to "come in and…

— Brian Armstrong (@brian_armstrong) June 6, 2023