In response to the SEC’s arguments against its petition for a writ of mandamus, Coinbase said the financial regulator is “talking out of both sides of its mouth, and it’s wrong on both ends.” The crypto exchange’s chief legal officer Paul Grewal described mandamus as “the tailored remedy for extraordinary facts.”
A long-standing dispute between the crypto exchange and the market regulator is at the heart of the battle. Last month, Coinbase sued the SEC, saying the latter failed to provide an answer because the former sought a formal notice-and-comment process that would enable the public to weigh in. .”
Coinbase vs SEC
In a 23-page filing with the Third Circuit of the United States Court of Appeals, the crypto exchange said that the SEC’s extensive enforcement campaign on the same subject provided in Coinbase’s rulemaking petition made to delay the agency “unreasonably.”
Coinbase argued that mandamus was necessary and blamed the SEC for “making up its mind” in denying the petition. It also said that the Commission’s enforcement actions proved that it did not consider Coinbase’s Petition.
The filing also cited that the SEC has initiated more than 25 enforcement actions related to the digital asset since the filing of the petition in July 2022.
“These actions assume that the agency believes that the securities laws are clear and applicable as applied to digital assets and that additional rulemaking is unnecessary. And many of these enforcement actions require the Commission to take position on central questions in Coinbase’s rulemaking petition, such as the standard for identifying whether a digital asset is a security.
Coinbase also hit back at the SEC, saying that the latter’s argument that – regulated entities should wait to be sued – ignores its obligations to create important new legal standards by creating the rule and not enforcement.
The SEC’s Prior Response
After failed attempts to get an answer from the SEC about its position in proposing and adopting rules governing the regulation of securities offered and sold through digital native methods, a US court ruled of the commission to respond to the complaint of Coinbase in ten days.
The Commission then argued that it was under no obligation to issue new regulations and added that Coinbase did not have standing to sue the agency. It also said that the digital asset industry already has rules and regulations governing it.
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