Coinbase, one of the largest cryptocurrency exchanges in the United States, has filed a lawsuit against the Securities and Exchange Commission (SEC).
The lawsuit comes after Coinbase filed a petition for a rulemaking with the SEC last summer, requesting the commission to draft and approve a rule specific to digital assets. Coinbase is now seeking to force the agency to provide a definitive response to its petition.
In recent months, the SEC has taken steps to clarify that custody and exchange rules apply to digital assets. However, the agency has not yet drafted a rule specifically tailored to digital assets, which has prompted Coinbase to take legal action. Coinbase’s chief legal officer, Paul Grewal, stated in a blog post that the company believes the SEC has already made up its mind to deny their petition, but has not yet communicated its decision to the public.
Coinbase’s lawsuit against the SEC is a writ of mandamus, which is a type of lawsuit that can compel federal officials to take action in exceptional circumstances. The company has enlisted the help of outside counsel, including Eugene Scalia, a partner at the law firm Gibson Dunn and the son of former Supreme Court Justice Antonin Scalia, who has a track record of winning cases against financial regulators.
This is not the only legal battle Coinbase is currently facing with the U.S. government. The company is also dealing with an SEC investigation into its listing of certain digital assets, as well as its wallet and staking services. Additionally, Coinbase has backed a lawsuit against the U.S. Treasury Department over the sanctioning of transaction mixer Tornado Cash. In 2022, the SEC charged a former Coinbase employee with insider trading, alleging that nine of the tokens Coinbase announced it would list were unregistered securities. However, Coinbase itself was not accused of any wrongdoing.
The outcome of Coinbase’s lawsuit against the SEC could have significant implications for the cryptocurrency industry as a whole, as it may clarify the regulatory landscape for digital assets in the United States. If the SEC declines to draft a rule specific to digital assets, Coinbase may file further lawsuits in an attempt to compel the agency to do so. This legal battle highlights the ongoing challenges and uncertainties surrounding the regulation of cryptocurrencies and digital assets in the United States.