The SEC ‘regrets confusion’ it may have invited stating some tokens are securities The SEC ‘regrets confusion’ it may have invited stating some tokens are securities
Chief legal officer at Coinbase questions SEC's historical stance on tokens as securities.
2 min read
Updated: Sep. 13, 2024 at 4:48 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The US Securities and Exchange Commission (SEC) has filed an amended complaint against Binance in the District of Columbia, introducing procedural updates and legal modifications to its original filing.
The amendment, approved this morning, includes a motion under Federal Rule of Civil Procedure 15(a)(2), accompanied by a memorandum explaining the reasons for the changes, a proposed amended complaint, and a redline version highlighting the alterations.
Paul Grewal, Chief Legal Officer at Coinbase, commented on the SEC’s amended complaint via social media. “The SEC regrets any confusion it may have invited by falsely and repeatedly stating that tokens themselves are securities,” he noted, highlighting Footnote 6 of the amended complaint. He questioned the SEC’s longstanding position, stating,
“The SEC absolutely ‘maintained’ that tokens themselves are securities is clear from the long record of their regulation by enforcement campaign. Why mislead the Court?”
Grewal shared an extract from the complaint, which clearly states the SEC’s admittance of regret.
Grewal also addressed the SEC’s approach to Ethereum (ETH) transactions, noting the agency’s lack of clarity on how ETH transactions have meaningfully changed compared to other digital assets under scrutiny.
He remarked,
“Somehow ETH transactions have changed in a meaningful way that the Ten Crypto Assets have not so as to avoid the agency’s clutches. How? That’s apparently for the SEC to know, and the rest of us to find out only if and when we are sued.”
Per the amended complaint, the filing references additional documents, including an order denying the defendants’ motion to dismiss in a related case, SEC v. Payward, Inc. (Kraken). Procedural deadlines have been set, with Binance and its co-defendants required to respond by October 11, either opposing the SEC’s motion or filing a notice of consent.
Legal analysts suggest that the SEC’s amendment could be an attempt to bolster its case amid criticisms regarding regulatory clarity. The agency has faced ongoing scrutiny from industry participants who argue that its enforcement actions lack transparent guidelines for what constitutes a security in crypto.
Binance has been under regulatory pressure from the SEC, which alleges that the platform operated unregistered securities exchanges and misled investors. The exchange has consistently denied these allegations, asserting its commitment to compliance and cooperation with regulators.
The deadline for Binance and its co-defendants to respond to the SEC’s amended complaint sets the stage for a significant legal confrontation ahead of the US election, where crypto regulation is becoming increasingly important.
The industry’s demand for regulatory clarity continues to grow, with many calling for definitive guidelines rather than enforcement actions as the primary means of regulation.
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Liam 'Akiba' Wright
Also known as "Akiba," Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.
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Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Paul Grewal is the Chief Legal Officer of Coinbase where he is responsible for Coinbaseโs legal, compliance, global intelligence, risk management and government relations groups.
