Legal Bombshell Unleashed as Congress Gears Up for Crypto Legislation Showdown

• The SEC filed a lawsuit against Coinbase just one hour before the exchange was scheduled to testify before the House Committee on Agriculture on crypto legislation, raising questions about the timing of the lawsuit.
• Coinbase’s chief legal officer, Paul Grewal emphasized the importance of establishing clear regulations for the digital assets industry before enforcement actions are taken.

Along with Binance, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the crypto exchange Coinbase over allegations of violating federal securities laws. Paul Grewal, Coinbase’s chief legal officer, recently revealed some eye-opening details of how the SEC filed the lawsuit just one hour before Coinbase was set to testify on crypto legislation before the House Committee on Agriculture.

In his recent interview with Bankless, Grewal said that he was “curious” regarding the timeline of the lawsuit. Grewal said:

The fact of the matter is, I learned about this complaint, I don’t know, 45 minutes before I was scheduled to walk over to Capitol Hill and testify before the House Agriculture Committee on a draft bill that was released last Friday. So yeah, it’s interesting, curious, pick your word, that the SEC chose this morning of all days to file the lawsuit.

CoinbaseTestifying Before US Lawmakers

As said, the US SEC sued Coinbase just a day after filing a lawsuit on Binance i.e. Tuesday, June 6. The federal securities regulator blamed the exchange for operating as an unregistered securities broker and a clearing house. On the same day, Grewal testified on the draft of the digital assets framework bill review by the House of Representatives. He said:

The bill is actually quite interesting and quite important. It will provide for the very first time a real market structure for digital assets, including both digital asset commodities and digital asset securities. It will provide a pathway for registration, serious oversight, real protection for consumers and investors — a lot of the things that we have been clamoring for – for many months, if not many years, in the industry.

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Earlier this year in April, the crypto exchange filed a motion in the court forcing the SEC to respond to Coinbase’s request for guidance for the digital assets industry. This week, the U.S. Court of Appeals for the Third Circuit issued an order mandating that the regulator respond to the petition within a week. This order comes in response to the SEC’s lawsuit against the exchange, which was announced recently. Grewal added:

We continue to believe that the SEC could not be proceeding with litigation against our industry, like the case filed against us today, if the SEC had not already decided to deny our petition for rulemaking. We continue to believe that rules of the road, from legislation or rulemaking or both, must come before enforcement actions.

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That is why we petitioned the SEC for rulemaking nearly a year ago in the first place. If the SEC’s answer to our petition for rulemaking is ‘no,’ then they are required by law to tell us, because we have the legal right to question that ‘no’ in court. And there are serious questions to be asked.

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