Coinbase continues to oppose the US Securities and Exchange Commission (SEC) in court.
Coinbase Chief Legal Officer Paul Grewal criticized the recent court decision in SEC v. Crowd Machine. The decision reignited a heated debate over whether tokens qualify as securities and whether the Securities Act should apply to token issuers.
A Coinbase lawyer strongly disagrees with the court's ruling against token issuer Crowd Machine Compute and in favor of the SEC.
According to him, the token vs. security debate has now resurfaced, "So the tokens themselves are securities again?"
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CoinGape reported that Paul Grewal also questioned whether Coinbase's statements in open court could now be considered "false" since the court suddenly decided to side with the SEC and the SDNY decision is still pending.
Although Grewal called the defendants in the SDNY case fraudulent, that does not give the regulator "the right to make false statements in federal court." Otherwise, such statements create even more ambiguity about the application of laws and regulations. According to Coinbase's Chief Legal Officer, deciphering the SEC's understanding of the Securities Act has only gotten worse.
The SEC's case against token issuer Crowd Machine was heard by a US District Court on January 17, 2024. The court ruled against Crowd Machine, Metavine, and founder Craig Sproul. The defendants must pay $19.6 million and an additional $3.35 million in interest for issuing unregistered CMCT tokens. Craig Sproul will be barred from serving as an officer or director of a public company and fined $195,000.
Grewal believes the SEC's case was based on false statements regarding the token sales. The defendants did not plead guilty but agreed to a judgment requiring them to refrain from violating anti-fraud and registration provisions.
Meanwhile, Coinbase itself is in the midst of a legal battle with the US Securities and Exchange Commission. The SEC has filed a lawsuit accusing Coinbase of operating as an unregistered securities exchange. Coinbase denies the allegations and also claims that the SEC has no authority to control crypto assets.
Read also: Ethereum's price has fallen to $2,200 – is the SEC to blame?
