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Coinbase’s Legal Officer Rallying Binance, Ripple, Uniswap Against SEC’s ‘Gaslighting’

Jimmy Aki
Last updated: | 2 min read
Coinbase Legal Officer

Coinbase Chief Legal Officer Paul Grewal strongly criticized the US Securities and Exchange Commission (SEC) on May 14 regarding the Debt Box case. He also called on other crypto exchanges to query the SEC’s previous actions, considering the far-reaching implications for the sector.

Coinbase Legal Officer Questions SEC “Wells Notice” Strategy

In a thread on X, the Coinbase legal officer stated that the SEC had deviated from its typical Wells Notice process in its case against Debt Box, a cryptocurrency company it sued in 2023.

A Wells Notice is a formal notice from the SEC sent to a respondent informing them of the substance of the charges the regulator intends to bring against them.

According to Grewal, the Wells process is meant to aid the charging decision for a potential defendant, but Coinbase did not receive such a thorough explanation in its ongoing case with the SEC. The departure from the usual procedure raised questions about the validity of the SEC’s claims.

Given his strong criticism, Grewal called on other popular crypto exchanges that received Wells notices from the SEC –Ripple, Binance, Kraken, Robinhood, and Uniswap – to stand against what he called “gaslighting.”

He criticized the SEC for its lack of clarity and insufficient explanation of charges against these exchanges, suggesting that the regulator’s actions may be inconsistent and arbitrary.

The SEC filed a lawsuit against Coinbase in June 2023, alleging the company engaged in the unregistered offering and sale of securities since 2019. The legal dispute is ongoing, with the SEC recently requesting the court reject Coinbase’s appeal against the agency’s lawsuit.

US Court and Financial Actors Slams SEC’s Abuse Of Power

Judge Robert Shelby of the federal district court of Utah reportedly condemned the SEC for what he called a “gross abuse” of power in accusing Debt Box of defrauding investors of over $49 million.

The Judge also remarked that the SEC’s case against Debt Box was “marred by false statements and misrepresentations.” This resulted in the resignation of two SEC attorneys, as they admitted to errors but urged the judge to avoid formal punishment.

These events have sparked discussions about the SEC’s alleged overreach in its enforcement actions against crypto companies. When trading app Robinhood received a Wells notice from the SEC earlier this month for alleged securities violations, Jake Chervinsk, Variant Fund’s Chief Legal Officer, pointed out that the US regulatory agency is abusing the Wells process as a “scare tactic.”

Similarly, Hayden Adams, the founder of Uniswap, another entity that recently received a Wells notice from the SEC, criticized the agency for targeting “good actors” instead of providing clearer regulations for the crypto industry.