In a significant development in Coinbase’s lawsuit against the US Securities and Exchange Commission (SEC), the former won a partial victory. As per Southern District of New York Judge, Katherine Failla’s ruling the SEC is to provide key documents to Coinbase.
Coinbase Wins Document Disclosure from SEC
On September 5, Judge Failla ordered the SEC to release documents essential to Coinbase’s defense. These documents refer to digital assets as securities, as per the SEC.
Coinbase Chief Legal Officer Paul Grewal said that this decision will allow for important discovery that may change the course of the case. The SEC had earlier rejected these requests, arguing that they were too general and unrelated to the current legal proceedings.
The documents are anticipated to provide insight into the SEC’s views on digital assets, an area that has been the subject of much debate. Coinbase claims that the documents are critical for its defense and understanding of the legal standards in force.
The exchange asked questions about the SEC’s enforcement of the securities laws concerning the exchange’s IPO and statements made by SEC Chair Gary Gensler. This is a positive development for Coinbase when the SEC’s enforcement approaches are being challenged on several fronts.
Some have alleged that the SEC has been applying the law haphazardly in the crypto space, creating confusion. The result of this case may impact the future regulation and classification of digital assets.
States Criticize SEC’s Crypto Regulatory Approach
The SEC’s ongoing legal battle with Coinbase involves the latter operating as an unregistered securities exchange. This case is important as it may impact the regulatory outcome of other crypto companies.
As per the ruling, Ripple Labs was fined $125 million in August this year. This is an indication that the SEC will not let unregistered securities offerings slide.
Also, at the same time, a New Jersey judge has allowed an investor class-action lawsuit against Coinbase to go ahead. This lawsuit alleges that Coinbase deliberately failed to disclose that some listed assets were most likely securities. And that the company allegedly did this to boost growth and revenue.
The decision may lead to more legal actions and create serious issues for the cryptocurrency business. While the SEC has been working on new regulation, a group of seven US states have accused it of power grab that can harm innovation.
In their petition, this group led by Iowa Attorney General Brenna Bird, says that the SEC has overstepped its mandate. And that it could be detrimental to the cryptocurrency space. SEC Commissioner Hester Peirce has also said that the agency is in an ‘enforcement only mode.’ This only underlines the need for a clear regulatory framework.
