Breaking: Coinbase Files First Brief In SEC’s Rulemaking Denial Lawsuit

Coinbase, a U.S. cryptocurrency exchange, has officially filed its opening brief in a lawsuit against the Securities and Exchange Commission (SEC). This lawsuit has come about as a result of the SEC’s failure to set clear regulatory guidelines for the cryptocurrency industry, which Coinbase claims was a decision taken arbitrarily without adequate explanation.

The filing, submitted to the U.S. Court of Appeals for the Third Circuit, represents a major move in the ongoing war between the crypto exchange and the regulatory body.

Today @coinbase filed our opening brief in the Third Circuit challenging the SEC’s denial of our rulemaking petition. Tl;dr: the SEC’s denial is arbitrary and capricious, an abuse of discretion, and a violation of the Administrative Procedures Act. 1/7 https://t.co/v09uE2OHsb

— paulgrewal.eth (@iampaulgrewal) March 11, 2024

Coinbase’s Legal Argument

In the lawsuit, Coinbase argues that the SEC’s refusal to consider its rulemaking petition violates the fundamentals of sound administrative practice. Though the exchange had asked the regulatory body to formulate a formal framework that would provide an orderly regulatory path for digital assets, the SEC is said to have turned down the request in December, with a nonspecific reason for the rejection.

The lawyers of Coinbase, as a result, argue that such a refusal can’t be transparent since it leaves out individual characteristics of crypto assets and operates through certain imposed actions aimed at regulating the industry.

This lawsuit is unrelated to an ongoing lawsuit between Coinbase and the SEC in which the commission accuses the exchange of operating without proper registration and listing unregistered securities. Both cases, however, highlight issues within the cryptocurrency sector, such as undefined definitions and regulations by the regulatory authorities, especially regarding what crypto security would be considered.

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