A lawyer has actually described why the U.S. Securities and Exchange Commission (SEC) will likely lose if the regulator takes crypto exchange Coinbase to court over supposed securities law infractions. “The problem is entirely of Gary Gensler’s own making,” he worried.
Lawyer Expects SEC to Lose Against Coinbase in Court
Lawyer James Murphy described in a series of tweets Wednesday why he thinks the U.S. Securities and Exchange Commission (SEC) will lose if it takes Coinbase to court. Murphy began law practice Murphy & McGonigle in 2010 to represent customers in the securities and banking markets. The company rotated in 2017 towards representing emerging business that take advantage of blockchain innovation.
Referencing a Wells Notice, an official interaction that generally precedes a suit, that the securities regulator sent out the Nasdaq-noted cryptocurrency exchange in March, the lawyer suggested:
If the SEC follows through on its hazard to take legal action against Coinbase, I think the SEC will lose. The SEC’s case has a deadly defect. And the issue is completely of Gary Gensler’s own making.
Murphy described that SEC Chairman Gensler himself stated in his statement to Congress on May 6, 2021, that the SEC does not have the authority to manage cryptocurrency exchanges. Gensler’s statement followed his verification by the U.S. Senate on April 14, 2021, to act as chair of the SEC. He was sworn into workplace on April 17, 2021.
If the SEC submits a suit versus Coinbase, the crypto exchange’s legal group “will surely zero in on the communications within the SEC leading up to Gensler’s May 6, 2021 testimony,” Murphy stated, including that “All statement of an SEC Chairman is completely vetted internally prior to they affirm.”
Murphy worried: “So there will be emails, meeting notes, memos, text messages, chats, and deposition testimony showing that: There was a consensus within the SEC that it lacked legal authority from Congress to regulate crypto exchanges.”
He continued:
If they take legal action against Coinbase, the SEC’s attorneys will have the unenviable job of attempting to rationalize their own chairman’s statement to Congress and all the files and conversation that preceded it internally within the SEC … It’s an extremely awkward possibility for the SEC.
“Even more damaging will be all the discovery Coinbase will conduct around Gensler’s decision to pull a 180-degree reversal and suddenly claim that the SEC does have the authority to regulate crypto exchanges in the absence of any Congressional authorization,” the lawyer highlighted. “His unequivocal testimony before Congress and his bizarre 180-degree reversal make Gary Gensler himself the star witness at trial — for Coinbase.”
Do you believe the SEC will lose versus Coinbase if it takes the crypto exchange to court over supposed securities law infractions? Let us understand in the comments area below.
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