SEC faces accusations of contradiction in Coinbase rulemaking dispute

In the ongoing legal dispute between Coinbase Global Inc. and the U.S. Securities and Exchange Commission (SEC), the XRP holder’s lawyer, John Deaton, has accused the SEC’s top official, Gary Gensler, of ‘gaslighting’ the public and disagreed with his stance on cryptocurrencies.

The development in Coinbase’s rulemaking request occurred when the SEC rejected the trading platform’s petition based on three reasons.

These reasons encompass applying current securities laws to cryptocurrencies, the SEC’s engagement with the crypto securities markets through rulemaking, and the significance of preserving the Commission’s discretion in establishing its rulemaking priorities.

Despite these factors being apparent, John Deaton emphasized in response to the SEC Chair’s letter, stating “there is NOTHING unique or new about cryptocurrencies,” that Coinbase’s rulemaking request relies on the belief in the distinctiveness of the crypto ecosystem concerning asset volatility and the categorization of all assets as securities under current laws.

According to Deaton, this stance directly opposes the SEC Chairman’s statements during his congressional testimony earlier this year. Deaton remembered that during the hearing, Gary Gensler asserted that crypto lies beyond the commission’s scope due to its unique nature, creating a regulatory gap.

Deaton stated that Coinbase’s request relied on the SEC’s perspective, as evidenced by prior communications. The lawyer for XRP holders noted the SEC Chair’s complete reversal on the crypto issue, attributing it to political motives and backing from Senator Elizabeth Warren.

Related: SEC officials meet again with spot Bitcoin ETF filers

The U.S. SEC has been sending different signals about its position in the cryptocurrency ecosystem, either through the SEC Chairman’s words or the commission’s actions in general.

Amid ongoing legal disputes with Coinbase and Binance over crypto securities, the regulatory body declined to appeal its defeat against Grayscale Investments. The case involves the company’s attempt to transform its Bitcoin Trust into an operational spot Exchange Traded Fund (ETF).

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?