Coinbase Enlists Former Labor Secretary, Officially Sues SEC, Demands Establishment of Concrete Regulatory Rules

Coinbase's Chief Legal Officer, Paul Grewal, announced in an official statement that due to the SEC's prolonged delay in responding to Coinbase's petition from last year seeking guidance for the cryptocurrency industry, Coinbase has filed a lawsuit in federal court.

Reasons for Coinbase's Lawsuit Against the SEC

In July 21 of last year, Coinbase sent a petition to the SEC requesting the establishment of specific regulations regarding cryptocurrency. Subsequently, the SEC made two significant changes:

• Restricting cryptocurrency custody qualifications, challenging Coinbase: Exchanges may not necessarily be secure custodians and are not suitable for investment advice

• Expanding the definition of cryptocurrency exchanges: SEC reevaluates: Including DeFi in exchange regulation

Following this, the SEC not only issued Wells notices to Coinbase and initiated enforcement investigations but also continuously frustrated Coinbase by failing to provide a clear explanation on how to define the properties of crypto assets, prompting Coinbase to take legal action against the SEC.

Coinbase Sues SEC Under the Administrative Procedure Act

Under the United States Administrative Procedure Act, Coinbase has filed a lawsuit against the SEC, with a simple request: the SEC must provide an answer on whether they are willing to establish cryptocurrency regulations.

Chief Legal Officer Paul Grewal pointed out that the SEC is legally obligated to respond to this and has the right to decline, but he emphasized that based on the SEC's past enforcement practices, this situation is highly unusual:

For a regulatory agency to take multiple enforcement actions based on legal views that have not been shared with the public is highly abnormal. Federal leaders and regulatory agencies regulating in a detached manner, substituting regulation for enforcement, could potentially have negative impacts on U.S. competitiveness and national security.

According to the legal documents, Coinbase has assembled a team of prominent attorneys to handle this lawsuit, including the late Justice Antonin Scalia's son, Eugene Scalia, the 28th U.S. Secretary of Labor, as an external attorney.