Main navigation

Legal Expert Explains Why SEC May Lose If It Sues Coinbase: Details

Thu, 05/04/2023 - 08:29
article image
Godfrey Benjamin
Comments from SEC chairman in May 2021 testimony to Congress could be basis for which commission loses to Coinbase should it sue trading platform
Legal Expert Explains Why SEC May Lose If It Sues Coinbase: Details
Cover image via

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of U.Today. The financial and market information provided on U.Today is intended for informational purposes only. U.Today is not liable for any financial losses incurred while trading cryptocurrencies. Conduct your own research by contacting financial experts before making any investment decisions. We believe that all content is accurate as of the date of publication, but certain offers mentioned may no longer be available.

Read U.TODAY on
Google News

The regulatory climate in the United States crypto ecosystem is heating up, and with the Wells Notice sent to Coinbase exchange by the Securities and Exchange Commission (SEC) back in March, many are expecting legal action to follow. Should this happen, a crypto-friendly legal analyst believes the trading platform will come out triumphant against the market regulator.

Taking to his Twitter account, MetaLawMan, as he is popularly called, highlighted how SEC Chairman Gary Gensler revealed in his May 6, 2021, testimony to Congress how the commission is not empowered to regulate crypto trading platforms.

Commenting on the testimony, the legal analyst said the position of Chair Gensler is correct, adding that only Congress can determine who regulates the exchanges and that the commission cannot wish its own rules into existence.

MetaLawMan is convinced that Coinbase will keenly analyze all communications within the SEC leading up to Gensler's testimony before Congress. The analyst is convinced that every word in the testimony must have been vetted by staff of the SEC and deemed to be true before being uttered. This reality will set the SEC up for failure if it proceeds with any form of legal action.

XRP Holders' Lawyer Reacts to Coinbase's Response to SEC

Polarizing regulatory stance on exchanges

Despite the reality check as pointed out by MetaLawMan, the SEC has carried out a number of definitive legal actions against trading platforms in the U.S. over the past few years.

Kraken was one of the victims of the regulatory crackdown as the commission fined the exchange the sum of $32 million for offering staking as a service, which it deemed a security. In a bid not to get caught in the web of these uncertainties, Coinbase has sued the SEC for failing to provide detailed regulatory guidelines for the industry.

Whether the trading platform has a viable case is based on a different premise, but that does not negate the full interest and support of the community in the legal brawl.

article image
About the author

Godfrey Benjamin is an experienced crypto journalist whose main goal is to educate everyone around him about the prospects of Web 3.0. His love for crypto was birthed when, as a former banker, he discovered the obvious advantages of decentralized money over traditional payments. With his vast experience covering various aspects of Web3, Godfrey's articles has been featured on, Cryptonews and Coingape, among others.