A lawyer has explained why the US Securities and Exchange Commission (SEC) could potentially lose if the regulator takes cryptocurrency exchange Coinbase to court over alleged securities law violations. “The problem is entirely of Gary Gensler’s making,” he stressed.
The lawyer expects the SEC to lose to Coinbase in court
Attorney James Murphy explained in a series of tweets on Wednesday why he believes the US Securities and Exchange Commission (SEC) stands to lose if Coinbase takes to court. Murphy started the law firm Murphy & McGonigle in 2010 to represent clients in the securities and banking sectors. In 2017, the company headed towards representing startups that are taking advantage of blockchain technology.
Referring to the Wells Notice, a formal communication that usually precedes a lawsuit, that the securities regulator sent to the Nasdaq-listed cryptocurrency exchange in March, the attorney said:
If the SEC continues with its threat to sue Coinbase, I believe the SEC will lose. The SEC case has a fatal flaw. The problem is entirely created by Gary Gensler.
Murphy explained that SEC Chairman Gensler himself said in congressional testimony on May 6, 2021, that the SEC does not have the authority to regulate cryptocurrency exchanges. Gensler’s testimony followed his confirmation by the US Senate on April 14, 2021, to serve as chairman of the Securities and Exchange Commission. He was sworn in on April 17, 2021.
If the SEC files a lawsuit against Coinbase, the cryptocurrency exchange’s legal team will “certainly focus on communications within the SEC until Gensler’s testimony on May 6, 2021,” Murphy said, adding that “all of the testimonies were given by the chairman.” The SEC is a complete testimony. It was vetted internally before testifying.”
“So there will be emails, meeting notes, memos, text messages, conversations, and a certificate of nomination stating this: There was a consensus within the SEC that it lacked the legal authority from Congress to regulate cryptocurrency exchanges.” Murphy stressed.
He completed:
If they file a lawsuit against Coinbase, the SEC attorneys will have the unenviable task of trying to explain their boss’s testimony before Congress and all the documents and discussions that preceded it internally within the SEC… It’s a very embarrassing prospect for the SEC.
“More damaging would be all the revelations Coinbase makes about Gensler’s decision to pull a 180-degree reversal and suddenly claim that the SEC has the power to regulate cryptocurrency exchanges in the absence of any congressional authorization,” the attorney asserted. “His lucid testimony before Congress and his bizarre 180-degree reversal made Gary Gensler himself the star witness at the trial — for Coinbase.”
Do you think the SEC would lose against Coinbase if the crypto exchange took to court over alleged securities law violations? Let us know in the comments section below.
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