A fierce legal battle may soon be underway between Coinbase and the Securities and Exchange Commission (SEC). The crypto exchange giant’s CEO, Brian Armstrong, and General Counsel, Paul Grewal, have made it clear that they are ready to fight the SEC’s threatened lawsuit over its upcoming lending product.
But, according to one legal analyst, Meta Lawman, there’s a fatal flaw in the SEC’s case that could cause them to lose the fight. And it’s all because of the SEC Chairman, Gary Gensler.
Gensler testified before Congress in May 2021 that the SEC did not have the authority to regulate crypto exchanges – a fact that Meta Lawman confirms is correct. However, Gensler has since done a complete 180 and claimed that the SEC can indeed regulate crypto exchanges without Congressional authorization.
If the SEC goes ahead with the lawsuit, Coinbase’s legal team will likely focus on the internal communications within the SEC that led up to Gensler’s testimony. They may find emails, meeting notes, memos, texts, and deposition testimony showing that the SEC lacked legal authority from Congress to regulate crypto exchanges.
“Even more damaging will be all the discovery Coinbase will conduct around Gensler’s decision to pull a 180-degree reversal and suddenly claim that the SEC DOES have the authority to regulate crypto exchanges in the absence of any Congressional authorization.”
If Coinbase conducts discovery around Gensler’s decision to reverse his position, they may find themselves in possession of damaging evidence that could make Gensler himself the star witness at trial for Coinbase.
It remains to be seen who will emerge victorious in this upcoming legal showdown. But one thing is for sure: the stakes are high, and the tension is mounting as Coinbase and the SEC prepare to face off.