Coinbase’s chief legal officer has criticized the U.S. Securities and Exchange Commission (SEC) for its ambiguous position regarding FTX’s proposal to repay creditors using stablecoins or other cryptocurrencies. Although the SEC did not explicitly deem these transactions illegal, it retained the right to contest them, leading to frustration within the crypto community. This uncertainty has prompted calls for clearer regulatory guidance from federal agencies.
Coinbase Legal Chief Challenges SEC Over Unclear Crypto Guidance
Paul Grewal, the chief legal officer at cryptocurrency exchange Coinbase (Nasdaq: COIN), has voiced his concerns about the U.S. Securities and Exchange Commission (SEC)’s lack of clarity on crypto exchange FTX’s plan to repay its creditors in stablecoins or other cryptocurrencies.
Grewal’s comments came in response to a filing submitted on Friday, in which the SEC reserved its rights regarding the approval of FTX Trading Ltd.’s Joint Chapter 11 Plan in the U.S. Bankruptcy Court for the District of Delaware.
“The SEC didn’t outright state that such an action would be illegal,” Grewal stated on the social media platform X on Sunday. He referred to the language used by the securities regulator in a court filing, where the SEC wrote:
The SEC is not opining as to the legality, under the federal securities laws, of the transactions outlined in the Plan and reserves its rights to challenge transactions involving crypto assets.
Grewal expressed his frustration with the SEC’s reluctance to provide clear guidance, questioning the agency’s approach by asking, “Why offer clarity to the market when threats and ambiguities suffice?” He went on to criticize the SEC’s tactics, stating:
Investors, consumers and markets deserve better. Way better.
The remarks from Coinbase’s legal head highlight the ongoing frustration within the crypto community over regulatory uncertainty and the growing demand for more straightforward guidance from federal authorities.
The SEC accused FTX’s founders of defrauding equity investors and platform users. As FTX undergoes liquidation, it plans to sell assets and may distribute stablecoins to creditors. The SEC has not taken a definitive legal stance on crypto asset transactions and maintains the right to challenge them under federal securities laws. The SEC has also requested changes to the liquidation plan, including the removal of a discharge provision, and reserves the right to oppose the plan if these changes are not made.
Source: Bitcoin
