In a major legal development, the U.S. Securities and Exchange Commission (SEC), led by Gary Gensler, has suffered a setback in its ongoing battle with Coinbase. This marks another loss for the SEC, following a string of defeats in recent crypto-related cases.
Court Rebukes SEC’s Actions
Coinbase has won its petition for a writ of mandamus at the Third Circuit Court of Appeals, which rebuked the SEC for denying its request for clearer rules regarding the regulation of digital assets. The court found the SEC’s order insufficiently reasoned and arbitrary, stating that it was “conclusory” and “capricious.” This ruling forces the SEC to reconsider its stance and provide a more thorough explanation for its refusal to create specific rules governing crypto regulations.
Paul Grewal, Chief Legal Officer at Coinbase, took to Twitter to celebrate the victory, stating: “We just won our petition for a writ of mandamus at the Third Circuit rebuking the SEC for its order denying our rulemaking petition.” He said that the court’s decision highlighted the SEC’s failure to provide adequate reasoning for its actions.
“We further appreciate Judge Bibas’ concurrence, in which he speaks forcefully about the looming constitutional concerns “with ex post enforcement without announcing ex ante rules or guidance.” It’s an impressive piece of work,” he wrote.
A Pattern of Losses for the SEC
This ruling adds to a growing list of defeats for the SEC under Gensler’s leadership. The agency has been called out for its arbitrary decision-making in multiple cases, including the Grayscale Bitcoin ETF rejection, where the SEC was similarly criticized for its lack of justification. Legal experts have long criticized the SEC’s approach to crypto regulation, accusing the agency of overreach and bias.
