The SEC was told to respond to Coinbase’s petition, but its response was noncommittal.
Cryptocurrency company Coinbase filed a formal request in federal court on Saturday following a long period of silence and evasive responses from the U.S. Securities and Exchange Commission.
“We can’t wait for next week’s deadline to address the SEC’s response to the Third Circuit’s June 6th order,” Coinbase Chief Legal Officer Paul Grewal tweeted. “It is unusual for the government to refuse direct questioning in federal court.”
He added, “As we have laid out today, the SEC’s evasive response goes further.”
According to Coinbase’s filing, the company is requesting a “writ of mandamus,” which is a court order issued by a higher court to a government agency ordering them to perform a specific action or duty they are legally obligated to perform.
In layman's terms, Coinbase is asking a federal judge to force the SEC to create clearer rules and standards for the digital asset industry, which was the goal of a petition the crypto exchange filed last year.
Although the SEC never responded to the petition, it sued the cryptocurrency company earlier this month, alleging that it failed to register as an exchange, clearinghouse, and broker despite offering those services to investors. The lawsuit also claimed that Coinbase sold unregistered securities on its platform.
A judge took note of the SEC’s action against Coinbase and ordered the federal regulator to respond to the petition. In response, Coinbase said it is still considering possible action.
“The Commission’s refusal to say how long it will take to act on Coinbase’s petition confirms the futility of further delay,” Grewal tweeted, “At a minimum, the court should order the Commission to report on its actions.”
Coinbase made some inflammatory comments about the SEC, saying it was “pushing the limits of cognitive dissonance” by demanding compliance with rules that don’t exist.
The commission, led by Chairman Gary Gensler, has insisted that clear rules already exist. Still, the agency was in the news recently for asking a court to reject Coinbase’s request for clearer rules.
Coinbase has been steadfast in its pursuit of an eventual regulatory scheme, despite having said in the past that the SEC has no intention of establishing one. Saturday’s filing reaffirmed that stance, with the cryptocurrency exchange saying the agency has been “inconsistent” in effectively creating a “Catch-22” for the industry.
While Gensler said the SEC “stands ready to help,” their actions suggest otherwise.
