Former SEC Chief: Coinbase's SEC Defense Is Criminal

John Reed Stark, former Chief of the SEC Office of Internet Enforcement, has criticized Coinbase Global Inc's defense strategy against the markets regulator. He argues that the exchange's claim of regulatory approval during its IPO in 2021, implying the SEC's understanding of its operations, is fundamentally flawed.

John Reed emphasizes that the SEC's role in IPO filings is to review the accuracy of disclosures made by the applying company. He highlights that the SEC includes a disclaimer in every prospectus, explicitly stating that they have not approved or determined the truthfulness and completeness of the securities or the prospectus. John Reed provided an example of the disclaimer, which emphasizes that any contrary representation is a criminal offense.

According to him, the SEC's primary objective is to assist investors in making informed investment decisions based on accurate information. Therefore, Coinbase's assertion that the SEC is aware of its business is unlikely to strengthen its defense in the ongoing lawsuit.

Coinbase Has a Long Road to Trail

Coinbase, the exchange, currently faces significant legal challenges as it deals with two lawsuits from the US SEC. Firstly, the platform filed a lawsuit against the SEC, led by Gary Gensler, alleging a lack of regulatory clarity despite previous requests for guidance.

The second lawsuit, which carries greater significance, involves charges against Coinbase for facilitating the trading of unregistered crypto securities such as Cardano (ADA), Solana (SOL), Filecoin (FIL), and Polygon (MATIC), among others.

Considering the protracted legal battle between Ripple Labs and the regulatory authorities, it is expected that Coinbase will face a similarly long and challenging legal process.