George23 on Nostr: According to the SEC, it should have warned Coinbase that its business could later be ...
According to the SEC, it should have warned Coinbase that its business could later be deemed an unauthorized offering
The court says the US Securities and Exchange Commission (SEC) could have given Coinbase notice that it might be violating securities laws before approving its disclosure request.
The same regulatory agency that allowed Coinbase to trade its stock later sued the company for violating securities laws.
The SEC filed a lawsuit against Coinbase in June, alleging that the Nasdaq-listed firm sold unregistered securities. However, as a crypto exchange, Coinbase provided a platform for cryptocurrency trading from the beginning, something the SEC must have been well aware of at the time of the disclosure approval.
SEC counsel Peter Mancuso told the court that the agency's approval of Coinbase's S-1 filing for an initial public offering (IPO) does not mean the commission has ever given its approval to the entire business:
“ Just because the SEC allows a company to go public does not mean that the SEC is blessing the underlying business or the underlying business structure or saying that the underlying business structure is not against the law.
There is no evidence that the SEC looked at specific assets and made a specific determination and then gave Coinbase the comfort that it would not later be found to be a security. “
However, Judge Katherine Polk Failla did not seem to agree with that assurance. She stated:
“ I am not saying that the board should be omniscient at the time it evaluates the registration statement and that it should know everything. But I would think that the commission is looking at what Coinbase is doing, and I would kind of expect them to say, you know, you really shouldn't be doing this. Is this against securities laws or we're in some interesting uncharted territory here in terms of whether the assets on your platform are securities, so be forewarned that maybe one day there might be a problem.
You could never tell them, 'You have to register as a stock exchange.' That was the SEC's authority to do, right? “
According to the judge, it is apparently not entirely irrelevant that Coinbase believed that its business was not in violation of the rules that the SEC oversees.
“ ..It's not crazy that Coinbase thought what they were doing was okay because that's exactly what you allowed them to do when they issued the S-1. “
The court says the US Securities and Exchange Commission (SEC) could have given Coinbase notice that it might be violating securities laws before approving its disclosure request.
The same regulatory agency that allowed Coinbase to trade its stock later sued the company for violating securities laws.
The SEC filed a lawsuit against Coinbase in June, alleging that the Nasdaq-listed firm sold unregistered securities. However, as a crypto exchange, Coinbase provided a platform for cryptocurrency trading from the beginning, something the SEC must have been well aware of at the time of the disclosure approval.
SEC counsel Peter Mancuso told the court that the agency's approval of Coinbase's S-1 filing for an initial public offering (IPO) does not mean the commission has ever given its approval to the entire business:
“ Just because the SEC allows a company to go public does not mean that the SEC is blessing the underlying business or the underlying business structure or saying that the underlying business structure is not against the law.
There is no evidence that the SEC looked at specific assets and made a specific determination and then gave Coinbase the comfort that it would not later be found to be a security. “
However, Judge Katherine Polk Failla did not seem to agree with that assurance. She stated:
“ I am not saying that the board should be omniscient at the time it evaluates the registration statement and that it should know everything. But I would think that the commission is looking at what Coinbase is doing, and I would kind of expect them to say, you know, you really shouldn't be doing this. Is this against securities laws or we're in some interesting uncharted territory here in terms of whether the assets on your platform are securities, so be forewarned that maybe one day there might be a problem.
You could never tell them, 'You have to register as a stock exchange.' That was the SEC's authority to do, right? “
According to the judge, it is apparently not entirely irrelevant that Coinbase believed that its business was not in violation of the rules that the SEC oversees.
“ ..It's not crazy that Coinbase thought what they were doing was okay because that's exactly what you allowed them to do when they issued the S-1. “