Lawyer expects SEC to lose if it sues Coinbase over ‘fatal flaw’ of Gary Gensler’s own production – Bitcoin News
A lawyer has explained why the US Securities and Exchange Commission (SEC) is likely to lose if the regulator takes crypto exchange Coinbase to court for alleged violations of securities law. “The problem is entirely of Gary Gensler’s own making,” he stressed.
Lawyer expects SEC to lose against Coinbase in court
Attorney James Murphy explained in a series of tweets on Wednesday why he believes the US Securities and Exchange Commission (SEC) will lose if it takes Coinbase to court. Murphy started the law firm Murphy & McGonigle in 2010 to represent clients in the securities and banking industry. In 2017, the firm pivoted towards representing new companies that utilize blockchain technology.
Referring to a Wells Notice, a formal communication that usually precedes a lawsuit, that the securities regulator sent the Nasdaq-listed cryptocurrency exchange in March, the lawyer said:
If the SEC follows through on its threat to sue Coinbase, I think the SEC will lose. The SEC’s case has a fatal flaw. And the problem is entirely of Gary Gensler’s own making.
Murphy explained that SEC Chairman Gensler himself said in his testimony to Congress on May 6, 2021 that the SEC does not have the authority to regulate cryptocurrency exchanges. Gensler’s testimony followed his confirmation by the United States Senate on April 14, 2021 to serve as chairman of the SEC. He was sworn in on 17 April 2021.
If the SEC pursues a lawsuit against Coinbase, the crypto exchange’s legal team “will certainly zero in on communications within the SEC until Gensler’s testimony on May 6, 2021,” Murphy said, adding that “All testimony by an SEC chairman is thoroughly vetted internally before testifying .”
Murphy emphasized, “So there will be emails, meeting notes, memos, text messages, chats, and deposition testimony showing that: There was a consensus within the SEC that there was a lack of legal authority from Congress to regulate crypto exchanges.”
He continued:
If they do sue Coinbase, the SEC’s lawyers will have the unenviable task of trying to explain away their own chairman’s testimony to Congress and all the documents and discussions that preceded it internally at the SEC… It’s a very embarrassing prospect for the SEC.
“Even more damaging will be all the discovery Coinbase will make surrounding Gensler’s decision to pull a 180-degree reversal and suddenly assert that the SEC has the authority to regulate crypto exchanges in the absence of congressional authorization,” the attorney emphasized. “His unequivocal testimony before Congress and his bizarre 180-degree reversal make Gary Gensler himself the star witness in the trial – for Coinbase.”
Do you think the SEC will lose against Coinbase if it takes the crypto exchange to court over alleged securities law violations? Let us know in the comments section below.
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