In a major legal development, the U.S. Securities and Exchange Commission (SEC), led by Gary Gensler, suffered a setback in its ongoing battle with Coinbase. This marks another loss for the SEC following a string of defeats in recent cryptocurrency-related cases.
Court rebukes SEC’s actions
Coinbase won a writ of Mandamus petition in the Third Circuit Court of Appeals that criticized the SEC for denying its request for clearer rules on regulating digital assets. The court found the SEC’s order lacking validity and arbitrary, calling it “conclusive” and “capricious.” The ruling may force the SEC to reconsider its position and provide a more thorough explanation for its refusal to enact specific rules on cryptocurrency regulation.
Paul Grewal, Coinbase’s Chief Legal Officer, congratulated the win on Twitter, saying: “We just won a petition for writ of mandamus in the Third Circuit rebuking the SEC’s order denying our rulemaking petition.” He said the court’s decision highlighted that the SEC failed to provide an adequate basis for its actions.
“We appreciate Judge Bibas’s concurrence, which speaks strongly of the constitutional concerns he addresses looming “through ex post enforcement rather than issuing ex ante rules or guidance.” “It is an impressive piece of work,” he wrote.
SEC Loss Patterns
The ruling adds to the SEC’s list of losses under Gensler’s leadership. The agency has been criticized for arbitrary decision-making in several cases, including the rejection of the Grayscale Bitcoin ETF, and the SEC has been criticized for lacking legitimacy. Legal experts have long criticized the SEC’s approach to cryptocurrency regulation, accusing it of overreach and bias.