{"id":9545,"date":"2023-07-17T17:48:51","date_gmt":"2023-07-17T17:48:51","guid":{"rendered":"https:\/\/nft.runfyers.com\/index.php\/2023\/07\/17\/could-coinbases-sec-battle-come-down-to-its-s-1-filing\/"},"modified":"2023-07-17T17:48:51","modified_gmt":"2023-07-17T17:48:51","slug":"could-coinbases-sec-battle-come-down-to-its-s-1-filing","status":"publish","type":"post","link":"https:\/\/nft.runfyers.com\/index.php\/2023\/07\/17\/could-coinbases-sec-battle-come-down-to-its-s-1-filing\/","title":{"rendered":"Could Coinbase&#8217;s SEC Battle Come Down to Its S-1 Filing?"},"content":{"rendered":"<p><\/p>\n<div>\n<p class=\"has-drop-cap\">In the ongoing legal confrontation between <a href=\"https:\/\/nftnow.com\/news\/coinbase-challenges-the-sec-seeks-case-dismissal-defending-its-practices\/\" target=\"_blank\" rel=\"noreferrer noopener\">cryptocurrency exchange giant Coinbase<\/a> and the U.S. Securities and Exchange Commission (SEC), District Judge Katherine Polka Failla has raised eyebrows in the crypto community with her probing questions and comments related to the SEC\u2019s 2021 approval of Coinbase\u2019s S-1 filing.\u00a0The relevant courtroom exchanges unfolded during a pre-motion hearing on July 13 and centered on Coinbase\u2019s initial public offering (IPO) in 2021.<\/p>\n<p>Coinbase\u2019s IPO, which required an effective S-1 filing with the SEC, allowed the company\u2019s shares to be publicly traded for the first time. S-1 filings are the type of registration required by the SEC for new securities for public, U.S.-based companies. In June, the <a href=\"https:\/\/nftnow.com\/news\/sec-sues-coinbase-over-alleged-security-violations\/\" target=\"_blank\" rel=\"noopener\">SEC filed a civil lawsuit<\/a> against Coinbase alleging securities law violations, though it raised no concerns at the time of the IPO, a contrast Judge Failla called out in the case\u2019s hearing held last week. <\/p>\n<h2 class=\"wp-block-heading\" id=\"h-moving-the-legal-goalposts\">Moving the legal goalposts<\/h2>\n<p>In <a href=\"https:\/\/assets.ctfassets.net\/c5bd0wqjc7v0\/46XloV2v8raTCNRhg8XTKZ\/2a13c4bec44230bc8ae30ab37c01722e\/Premotion_Conference_Tr.__7.13.23_.pdf\" target=\"_blank\" rel=\"noopener\">court documents revealing the conversation<\/a> that took place during the hearing, Judge Failla conjectured that Coinbase may have inferred their actions as permissible from the SEC\u2019s lack of opposition during the S-1 filing process.<\/p>\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><\/figure>\n<\/div>\n<p>The SEC\u2019s legal counsel was quick to clarify, arguing that the acceptance of the S-1 filing does not imply approval of the company\u2019s underlying business model or operations:\u00a0<\/p>\n<p>\u201cSimply because the SEC allows a company to go public does not mean that the SEC is blessing the underlying business, or the underlying business structure, or saying that the underlying business structure is not in violation of the law,\u201d they said.<\/p>\n<p>The SEC\u2019s counsel could not provide evidence to confirm that the regulatory body had examined specific assets listed on Coinbase\u2019s platform or assured the cryptocurrency exchange that they wouldn\u2019t be deemed security later on. This discrepancy in the SEC\u2019s actions during Coinbase\u2019s IPO process attracted Judge Failla\u2019s scrutiny, who further suggested that the SEC\u2019s position on the S-1 filing required skepticism.<\/p>\n<p>In the court\u2019s view, the SEC may have done well to have conducted its due diligence into the company\u2019s business practices during the evaluation of Coinbase\u2019s S-1. This, Judge Failla believes, could have alerted Coinbase to potential future problems in their business operations. Even though she did not expect the SEC to be \u201comniscient,\u201d she expressed a belief that they should have had some foresight into potential conflicts between Coinbase\u2019s business and securities laws.<\/p>\n<div class=\"wp-block-columns is-layout-flex wp-container-3\">\n<div class=\"wp-block-column is-layout-flow\">\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">In the interest of transparency, here is the transcript from our hearing yesterday in the SDNY case brought against us by the SEC. We appreciate the Court\u2019s careful consideration. <a href=\"https:\/\/t.co\/NEEsr05fos\" target=\"_blank\">https:\/\/t.co\/NEEsr05fos<\/a><\/p>\n<p>\u2014 paulgrewal.eth (@iampaulgrewal) <a href=\"https:\/\/twitter.com\/iampaulgrewal\/status\/1679982125410406401?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"noopener\">July 14, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<\/div>\n<div class=\"wp-block-column is-layout-flow\">\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">SEC v. <a href=\"https:\/\/twitter.com\/coinbase?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"noopener\">@Coinbase<\/a> update<\/p>\n<p>We now have the transcript of the pre-motion conference held on Thursday.<\/p>\n<p>Things went worse for the SEC than was initially reported.<\/p>\n<p>The Judge explicitly aligned herself with Coinbase on a key argument.<\/p>\n<p>That is unusual for a first appearance.<\/p>\n<p>More\u2026<\/p>\n<p>\u2014 MetaLawMan (@MetaLawMan) <a href=\"https:\/\/twitter.com\/MetaLawMan\/status\/1680198472819982336?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"noopener\">July 15, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<\/div>\n<\/div>\n<h2 class=\"wp-block-heading\">A change in the regulatory wind?<\/h2>\n<p>This distinction was one that Steven Peikin, part of Coinbase\u2019s legal team and a former co-director of the SEC\u2019s enforcement division, also pressed. Peikin pointed out the SEC\u2019s historical practice of declining to review registrations from sectors like cannabis and betting.\u00a0Reinforcing Judge Failla\u2019s skepticism, Peikin argued that the SEC\u2019s authorization of Coinbase\u2019s S-1 carried more legal weight than the regulatory body claimed.<\/p>\n<p>While the proceeding represents a small portion of the SEC\u2019s lawsuit against the exchange, there have been few instances of judicial representatives either empathizing with the arguments presented by crypto exchanges or <a href=\"https:\/\/nftnow.com\/news\/xrp-ruled-not-a-security-in-partial-win-for-ripple-labs\/\" target=\"_blank\" rel=\"noreferrer noopener\">ruling in their favor<\/a>. Some in the Web3 community are eager to see this as a sign that the position of Web3-native companies operating in the NFT and crypto sphere are less invalid than the SEC has made them out to be in its regulatory approach.<\/p>\n<p><em>Editor\u2019s note: This article was written by an nft now staff member in collaboration with OpenAI\u2019s GPT-4.<\/em><\/p>\n<\/p><\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\"https:\/\/nftnow.com\/news\/coinbase-sec-lawsuit-could-come-down-to-s1-filing\/\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the ongoing legal confrontation between cryptocurrency exchange giant Coinbase and the U.S. Securities and Exchange Commission (SEC), District Judge Katherine Polka Failla has raised eyebrows in the crypto community with her probing questions and comments related to the SEC\u2019s 2021 approval of Coinbase\u2019s S-1 filing.\u00a0The relevant courtroom exchanges unfolded during a pre-motion hearing on [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":9546,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[10],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/nftnow.com\/wp-content\/uploads\/2023\/07\/Coinbase-Featured.png","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/9545"}],"collection":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/comments?post=9545"}],"version-history":[{"count":0,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/9545\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/media\/9546"}],"wp:attachment":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/media?parent=9545"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/categories?post=9545"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/tags?post=9545"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}