Coinbase’s CLO Criticizes SEC’s Approach In Binance’s Legal Battle
- Binance and Coinbase are in a legal battle with the SEC over alleged violations of operating guidelines.
- The SEC has reserved the power to identify specific tokens being claimed as securities, citing the case’s “pleading stage” as the basis for their hesitation.
- 14 tokens, including BNB, are currently under dispute, and Coinbase’s Chief Legal Officer criticized the SEC’s approach, stating that it may not be legal.
Upon examining a transcript of Binance‘s hearing before Judge Jackson, Coinbase’s Chief Legal Officer, Paul Grewal, noticed the US Securities and Exchange Commission’s perplexing legal approach.
According to the transcription, the court inquired with the SEC regarding the defendants’ trading of non-security tokens. So, are the remaining tokens secure or not?
Grewal’s major beef was with the SEC’s strategy of reserving the power to identify the specific tokens being claimed as securities. This strategy seems to be based on getting through the first phases of the litigation and into the discovery process, when additional information may possibly be discovered.
At the court hearing, the SEC counsel was asked to characterize the tokens that were not claimed as securities. Instead of delivering a clear response, the lawyers cited the case’s “pleading stage” as the basis for their hesitation. It is essential to enter the discovery phase, when a comprehensive examination of the category may be performed.
The judge, however, queried once again about the tokens, which were not mentioned in the case. It inquired as to where the commission classified them and if they were classified as commodities.
Nevertheless, the SEC indicated that they are not taking sides and are working to get around them. It went on to say that this is how further information is necessary under Rule 8. The commission notified the court and parties that 14 tokens, including BNB, are under dispute. Since when does Rule 8 (or 11) enable any party to reserve specifying what it claims to “Go beyond” and filing a motion to dismiss?
Binance and Coinbase, the world’s two largest cryptocurrency exchanges, are facing legal ramifications from the SEC for allegedly violating operating guidelines. While the legal battle rages on, Coinbase’s Legal Chief emphasized the commission’s perplexing approach to token classification in the Binance case.
Changpeng Zhao, CEO of Binance, was quick to support Grewal’s views in response to Coinbase’s Chief Legal Officer’s tweet thread.
According to XRP Holders’ counsel, Attorney John Deaton, the SEC’s position implies that they are retaining the ability to label anything as security at a later date.
Notwithstanding his reservations, Grewal praised the SEC counsel’s candor. He praised their honesty, saying it correctly portrayed the situation. But, he also said that, although their honesty is admirable, it may not be legal.
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