SEC Faces Tough Questions Before Court of Appeals in Coinbase Case
Jake Chervinsky, chief legal officer of Variant Fund, a cryptocurrency-focused venture capital firm, has highlighted the intense scrutiny the Securities and Exchange Commission (SEC) is facing before the Court of Appeals for the Third Circuit.
Chervinsky expressed his belief that it is high time to halt the SEC’s questionable practice of regulation through enforcement actions, suggesting that the Third Circuit could be the catalyst for change.
In a recent development, cryptocurrency exchange Coinbase presented oral arguments before the Third Circuit in its ongoing legal battle against the SEC. The focal point of the exchange’s case revolves around the SEC’s alleged arbitrary and capricious denial of Coinbase’s petition for rulemaking.
During the proceedings, the appeals court judges reportedly put the SEC under the microscope for its reluctance to prioritize digital assets in its rulemaking agenda. The panel’s scrutiny suggests a growing skepticism towards the SEC’s decision-making processes.
Paul Grewal, Coinbase’s chief legal officer, criticized the SEC for failing to provide a cogent rationale for its denial of Coinbase’s petition. Grewal emphasized that the SEC’s approach of enforcing regulations without clear guidelines is detrimental to American consumers, stifles innovation, undermines US competitiveness, and poses a threat to national security.
While the outcome of the case remains uncertain, reports from WSJ reporter Dave Michaels indicate that the SEC faced more challenging questions from the appeals court judges compared to Coinbase during the hearing.