Coinbase Faults the SEC for Not Responding to Court Orders

The cryptocurrency exchange, Coinbase asked the federal court on Saturday to compel the Securities and Exchange Commission (SEC) to respond to a petition it filed last year. Coinbase petitioned the commission requesting clear rules for identifying which digital assets are classified as securities.

In Saturday's filing, Coinbase requested 'mandamus', which refers to an order issued by a court to the government agency, in this case, it would compel them to perform a certain task. Specifically, the exchange is asking the court to order the agency to set clear rules for digital assets.

Clear Crypto Rules

"The Court should grant mandamus now because the Commission has decided not to grant Coinbase's rulemaking petition and is actively harming the industry," said Paul Grewal, Coinbase's Chief Legal Officer.

We couldn't wait until our deadline next week to address the SEC's response to the June 6 order from the Third Circuit. It is unusual for the government to defy a direct question from a federal court. But the SEC’s evasive response goes further, as we set out today. 1/5 pic.twitter.com/ssULmUpzi2

The SEC sued Coinbase for allegedly operating its cryptocurrency trading platform as an unregistered national securities exchange and broker. Following the lawsuit, the US Court of Appeals for the Third Circuit ordered the regulator to reveal whether it had granted Coinbase's petition.

In response, the SEC declared it had not decided what action to take regarding the petition, and that there was no basis for subjecting the commission's discretionary rulemaking agenda to a specific time. Earlier, the court asked the SEC how much time it would require to decide whether to grant or deny the petition.

Non-Committal Responses

"The Commission's refusal to say how much additional time it needs to act on Coinbase's petition confirms that further delay is futile," Grewal tweeted. "At a minimum, the court should order the Commission to report on its action – not an 'anticipated' staff recommendation – in no more than within 60 days and decide the mandamus petition promptly if the Commission still has not acted at that time. "

However, the SEC led by Gary Gensler, insisted that the rules related to digital assets are clear, yet the industry is still 'rife with non-compliance'. Gensler, who commented in March before the House Appropriations Subcommittee on Financial Services and General Government, added that most cryptocurrencies are securities.

The agency continues to pursue what has been termed by industry experts as 'regulations by enforcement'. Further, the SEC has brought many legal actions against several other top cryptocurrency exchanges besides Coinbase, including Binance and Binance.US.