The SEC has clarified that approving a company’s S-1 application for going public does not signify a “blessing” from the agency or assurance of regulatory compliance.
In the SEC vs. Coinbase case, court documents reveal that during the pre-motion hearing, the SEC argued that their approval of Coinbase’s S-1 filing in April 2021 should not be interpreted as an endorsement of the underlying business or confirmation of compliance with the law.
The SEC trial counsel, Peter Mancuso, clarified that approving an S-1 filing does not endorse the company’s entire business structure and does not guarantee compliance with securities laws in the future.
The statement raised concerns among individuals on crypto Twitter, questioning the SEC’s decision to allow a potentially non-compliant business to go public, given its role in consumer protection.
U.S. companies must submit an S-1 filing to the SEC before listing shares on a national stock exchange. This filing entails providing a detailed overview of the company’s business structure and the use of proceeds from the Initial Public Offering (IPO).
Mancuso clarifies Coinbase’s position on staking services:
During the hearing, U.S. District Judge Katherine Polk Failia expressed skepticism about the SEC’s stance, suggesting that the agency should have conducted due diligence on Coinbase and warned the company if there were potential securities law violations.
In response, Peter Mancuso reiterated that S-1 filings primarily focus on approving company disclosures rather than implying the SEC’s endorsement of a business structure.
Coinbase, in its defense, is seeking early dismissal of the SEC’s charges, arguing that the agency received an exhaustive description of its business structure and planned activities before the company’s IPO.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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