Coinbase Warns SEC: Don't Mess With Crypto's Big Dog

Coinbase Global Inc. COIN is taking steps to prevent the SEC from filing a lawsuit against the firm, emphasizing the challenges the agency might face in such a legal battle.

In a detailed response to the SEC's March Wells Notice, which indicated the regulatory agency's intention to initiate an enforcement action, Coinbase warned that it would be "a well-resourced adversary that will necessarily be motivated to exhaust all avenues."

That said, the company's Chief Legal Officer Paul Grewal stated Coinbase would prefer to avoid a lawsuit altogether.

The SEC, led by Chair Gary Gensler, consistently maintained most digital assets are securities and that crypto firms must adhere to existing regulations.

Gensler also expressed concerns about crypto exchanges that perform multiple roles, such as acting as exchanges, brokerages and clearing agencies, which he believed created conflicts of interest.

Coinbase argued none of the tokens it lists are securities and that the SEC should create new regulations to clarify how securities laws apply to digital assets.

The SEC's Wells Notice, which identified potential securities law violations by Coinbase, heightened tensions between the two parties.

Also Read: Regulation Rumble: Unpacking The Coinbase-SEC Showdown And What It Means For Crypto

Coinbase faces significant risks if the SEC pursues enforcement action against it.

In an attempt to preempt litigation, Coinbase filed a lawsuit earlier this week, asking a court to compel the SEC to respond to a rulemaking petition submitted last year.

The SEC may still pursue its enforcement action.

In its response to the Wells Notice, Coinbase cautioned that such litigation would expose the SEC's practices to scrutiny, including its alleged refusal to allow Coinbase to register using an alternative trading system license.

The company accused the SEC of using the threat of legal action to pressure it into registering as a national securities exchange and clearing agency, which could potentially force Coinbase to overhaul its entire customer-facing business and public company governance structure.

Read Next: Coinbase Considers Abandoning US: The Shocking Revelation That Could Shake The Crypto World

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