Coinbase Informed About SEC Charges Minutes Before Its Legal Officer Was To Present Draft Bill to Congress

Paul Grewal, Coinbase’s chief legal officer, was informed of the U.S. Securities and Exchange Commission’s (SEC) lawsuit against his company less than an hour before he was set to testify on crypto legislation before the House Committee on Agriculture.

Grewal says in a new interview with Bankless that the timing of the SEC’s announcement this week is “curious.”

“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.”

The SEC sued Coinbase on Tuesday, alleging the top US crypto exchange operated as an unregistered securities exchange, broker, and clearing agency.

Later that day, Grewal testified on a discussion draft of a digital asset framework bill that’s being reviewed by the House of Representatives.

Says the Coinbase chief legal officer,

“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.” 

Coinbase filed a motion in court in April to compel the SEC to respond to an earlier petition from the company requesting guidance for the digital asset industry.

This week, the U.S. Court of Appeals for the Third Circuit issued an order requiring the regulator to respond to the petition within seven days. The order cited the SEC’s recently announced lawsuit against the exchange.

Explains Grewal,

“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. 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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