The SEC has argued in court that the approval of an S-1 company’s application to go public, does not represent a “grace” from the agency, nor does it provide verification that the business is compliant with regulations.
For the sake of transparency, here’s a transcript of yesterday’s hearing in the SDNY case brought against us by the SEC. We appreciate the court’s careful study. https://t.co/NEEsr05fos
– paulgrewal.eth (@iampaulgrewal) July 14, 2023
According to the court of July 13 documents From the pre-motion hearing of the SEC vs Coinbase case, the SEC confirmed that it did not sign off on Coinbase’s business structure when it was given the green light to return to the public in April 2021.
“Your Excellency, I will say that just because the SEC allows a company to go public does not mean that the SEC blesses the underlying business or the underlying business structure or says the underlying business structure does not violate the law,” said SEC attorney Peter Mancuso, Adding that:
“There is no way that approval of the S-1 would have been a boon for the entire company’s business. In fact, there is no evidence put forward that the SEC looked at specific assets and made specific decisions and then gave Coinbase the comfort that this would not later be found to be a guarantee.” “.
On crypto Twitter, several people, including Gemini co-founder Cameron Winklevoss, have highlighted the implications of such statements, questioning why the SEC would allow supposedly non-compliant companies to go public in the first place, Given that its goal is to protect the United States. consumers.
So they allow illegal business to be involved and allow Americans to invest in it? The lmao was over cooked again
– Metatron (@metatron_0x) July 14, 2023
Corporations based in the United States are required to file an S-1 with the Securities and Exchange Commission before they can begin listing their stock on the national stock exchange. As part of the filing, companies need to provide a comprehensive summary of their business structure and how they will use the proceeds of the initial public offering.
Following Mancuso’s comments, US District Judge Kathryn Polk-Velha said: “Let’s pause so I can kind of clear the doubts I currently have when I hear that answer,” she continued, asking a few questions.
“I am not saying that the committee should be omniscient at the time it is evaluating the registration statement and know everything,” she said, adding:
“But I would have thought that the committee was doing the best they can about what Coinbase is doing, and in a way I thought they would say, you know, you shouldn’t do that. This is a violation of securities laws, or we’re kind of in interesting uncharted territory here as to what If the assets on your platform are securities, then be aware that one day there may be a problem.”
In response, Mancuso ultimately reiterated the SEC’s argument that the S-1 filings focus more on approving the company’s disclosures, rather than the agency itself signing off on the business structure through approval.
Judge Vilea then asked Mancuso if the SEC could say to Coinbase: “Hey, you guys need to register as a stock exchange.”
“That was within the authority of the SEC, right?” I wondered.
Mancuso replied, “I can’t really talk about that.”
Related: It’s time for the SEC to settle with Coinbase and Ripple
The SEC initially charged Coinbase over alleged unregistered securities offerings dating back to 2019.
Coinbase is pressing for an early dismissal of the case on several grounds, with one of its arguments being that the SEC is charging the company even though its business structure and planned activities were “exhaustively described” to the agency prior to the Coinbase IPO.
magazine: Crypto Regulation – Does SEC Chairman Gary Gensler Have the Final Word?
