"No"
Today I was looking for an update on the Coinbase lawsuit and I couldn't find one. Back in August Coinbase filed a petition to dismiss the case on the grounds that the SEC's rule by enforcement strategy is ridiculous and that Coinbase doesn't fall under their jurisdiction because they don't actually facilitate the trade of securities.
For those who need a reminder (I certainly did), the basis of the SEC's lawsuit against Coinbase in the first place is that Coinbase was offering staking-as-a-service as far back as 2019. How embarrassing is it for the SEC that prosecute something like this arbitrarily four years after that fact? I'm not sure but they don't seem too embarrassed about it like any normal person would expect.
The point being is that Coinbase is known to be perhaps the most by-the-book and law-abiding crypto exchange in the entire world. They dot every 'i' and cross every 't'. They have receipts, and have no doubt asked the SEC for clarity on this exact issue multiple times without any kind of answer except for a lawsuit 4 years later. It's painfully obvious at this point that the SEC can't protect investors and simply operates as a way to generate fees for the government. When was the last time the SEC actually fined a company and then gave the proceeds to the actual victims of the crime? I'm thinking 'never' is the correct answer here, especially when considering crypto enforcement. Just ask FTX.
In any case, the last piece of news on this topic was back in October when the SEC asked the judge to decline Coinbase's motion to dismiss. There hasn't been any chatter about this up until now, so I have to assume that the judge is still mulling it over months later. Behold the blinding speed of the judicial system.
It would be pretty hilarious for the case to get dismissed outright, as this would be appropriate considering the SEC's recent losses against both Ripple and Grayscale. The odds certainly don't seem to be tilted in the SEC's favor at this point. Even if it goes to court Coinbase will probably still win, and even if they don't win it will just be another fine and business will continue as usual.
The interesting thing to note here is that Coinbase's decision to even allow staking-as-a-service stemmed from the fact that FTX was stealing customers by being the first exchange to offer services like this. I remember it well: everyone was harping on how awesome FTX was because you could yield farm on it.
I remember thinking, "Oh my god I'm not going to touch that with a ten foot pole." Why would I trust a custodian to stake assets for me that I can just stake myself? It's common sense. Purposefully HODLing on an exchange is not the way to go. This is known, at yet how many people lost their entire net worth during the collapse?
Current events
While I couldn't find any updates on the Coinbase lawsuit with the SEC, I did find two other interesting tidbits of news. The first was Coinbase initiating their own lawsuit against the regulator.
The five-member commission, in a 3-2 vote, said it would not propose new rules because it fundamentally disagreed that current regulations are "unworkable" for the crypto sphere, as Coinbase has argued. Coinbase later said it had filed a petition for review of the SEC's decision in court.
Remember when Coinbase asked the SEC to provide better regulatory clarity when it came to crypto? Because maybe using 100-year-old laws is not appropriate for cutting-edge technology? Ah well the SEC just officially declined that request, and now Coinbase basically seems to be counter-suing them (not for money but just for extra credit), which is honestly a pretty cool strategy at this point. I have a feeling the Coinbase lawyers are going to absolutely slay them on this one. If we thought Ripple and Grayscale losses were embarrassments, this is going to be the icing on the cake.
Legal precedent
The language itself being used comes from the previous losses.
The SEC's decision was "arbitrary and capricious" and an "abuse of discretion", Coinbase said in a court filing that Grewal shared on social media platform X.
lol wut?
Arbitrary and capricious? That's the exact language used by the judge during summary judgement of the Grayscale victory. "To avoid arbitrariness and caprice, administrative adjudication must be consistent and predictable..." Coinbase lawyers are legit out here rubbing the SEC's nose in their own shit.
In his statement on Friday, Gensler argued that in asking the SEC to write rules, Coinbase had acknowledged the SEC's authority over the crypto sector, something the crypto exchange has refuted in the past.
LoL, so basically Gensler's argument is what? That because Coinbase asked the SEC to define what is a security and what isn't a security: that all crypto must be a security? What an asshole. This is borderline gaslighting at this point. Nah just kidding it's full blown gaslighting when taken in context with everything else. The SEC is full of shit and it's about to be proven in court yet again.
"No one looking fairly at our industry thinks the law is clear or that there isn’t more work to do,"
Super PAC
The second piece of news I found today was that crypto players seem to be collectively creating a political action committee in influence elections and lawmaking in their own best interests. This is something I've talked about being inevitable for years now. This is only the beginning and remains a constantly evolving situation.
The massive amount of cash that the PACs are prepared to use in support of likely pro-crypto candidates running for seats in both the House and Senate shows how the cryptocurrency industry is still trying to influence elections despite some recent headwinds.
Don't forget that politicians are shockingly cheap to buyoff.
The three super PACs — Fairshake, Protect Progress and Defend American Jobs — will have a combined $78 million in their campaign war chests starting next year after recently raising as much, according to the network’s release.
Who's contributing to this "war chest"?
The industry lost one of its top givers, former crypto king Sam Bankman-Fried.
Oh no, say it aint so!
- Andreessen Horowitz (A16Z) Venture capital fund responsible for the MakerDAO protocol (collateralized lending with stable coin DAI) and various other projects.
- veteran venture capitalist Ron Conway
- venture capital executive Fred Wilson
- tech executives Cameron and Tyler Winklevoss
- Ripple
Brian Armstrong, CEO of Coinbase, recently said at a conference that he had donated $1 million to Fairshake.
So... yeah.
The fractured barbarian hordes of crypto are forming an alliance to bitchslap the big bad government. Don't forget your popcorn. The more these people fight the easier it is to sit on the sidelines and continue developing actual decentralized infrastructure that can't be attacked so easily.
Conclusion
Republican SEC Commissioners Hester Peirce and Mark Uyeda said in a joint statement that they disagreed with the decision.
Crypto mom is not amused.
"In our view, the Petition raises issues presented by new technologies and other innovations, and addressing these important issues is a core part of being a responsible regulator," they said.
The winds of change are upon us.
Which way will they blow?
Return from Coinbase to SEC: Do your job. to edicted's Web3 Blog
