On Thursday, April 27th, Coinbase’s CEO Brian Armstrong and CLO Paul Grewal published a video response to the SEC on the topic of its recent Wells notice warning the exchange of a possible enforcement action. In the response, the two executives argued that they are still hoping there will be an amicable resolution to the matter that will offer beneficial regulatory clarity, but highlighted their company “will defend itself vigorously” if forced to.
Coinbase Offers Official Response to the SEC
This Thursday, Brian Armstrong and Paul Grewal, Coinbase’s CEO and CLO, published a video response to the SEC recent Wells notice directed at their firm. In the response, Armstrong highlighted that his decision to register the company in the US was due to his belief in the rule of law in the country, and due to its importance in the global market.
He also stated that he believes that the current lack of regulatory clarity and sufficient cryptocurrency-specific rules are harming the investors, the industry, and the US itself. According to Armstrong, despite the recent Wells notice issued to Coinbase by the SEC, his company is hoping it will be able to enter into a constructive dialogue with the Commission to resolve the issue.
While agreeing with Armstrong and maintaining an amicable posture, Coinbase’s chief legal officer Paul Grewal stated without ambiguity that the company “will defend itself vigorously” against the SEC if the agency moves forward with an enforcement action. Much like in the immediate aftermath of the Wells notice, the executives again pointed out their commitment to remaining compliant, and the numerous attempts at working with the Commission over the recent months and years.
Why is Coinbase Preparing to Fight the SEC
As a US-based publicly-traded cryptocurrency exchange, Coinbase has always prided itself for its commitment to compliance and investor protection. Despite this, the company received a warning from the SEC in March that the Commission has identified potential securities laws violations and is considering an enforcement action.
The notice arrived at a fraught time for the digital assets industry as US regulators have been ramping up pressure in the aftermath of the disastrous collapse of FTX. Coinbase quickly made its willingness both to fight the potential complaint and work with regulators known immediately but also warned that it may follow in the footsteps of many other cryptocurrency exchanges and move its headquarters from the United States due to the current climate in the country.
Earlier this week, Coinbase also decided to sue the Commission over a petition on rulemaking it filed many moths ago arguing it is well past the “reasonable” time the agency was obliged to respond in. Both the petition and the lawsuit are relatively minor as they only demand the SEC disclose whether or not it has an intention to create cryptocurrency-specific rules.
An amicable resolution, however, appears unlikely under the current circumstances. While Coinbase has always maintained that it lists no securities, SEC Chair Gary Gensler has repeatedly warned that most of the industry is not compliant and that all staking services—likely including the one offered by Armstrong’s exchange—constitute unregistered securities offerings. Additionally, only hours before Coinbase published its response, the SEC again reaffirmed its intent to bring digital assets to heel in a short social media video.
This article originally appeared on The Tokenist
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