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SEC’s Argument: S-1 Approval and Compliance Judge Questions SEC’s Approval Process Coinbase seeks Early Dismissal of SEC Case Hot Take: SEC’s Role in Protecting Investors and Coinbase’s Confidence in Compliance

SEC Argues S-1 Approval Does Not Indicate Compliance

  • The SEC has stated in court that approving a company’s S-1 application to go public does not mean the agency is endorsing the business or confirming regulatory compliance.
  • The SEC made this argument in the pre-motion hearing of the SEC vs Coinbase case, asserting that approving an S-1 filing is not a blessing of the company’s entire business structure.
  • Critics question why the SEC would allow a supposedly non-compliant business to go public and potentially harm U.S. consumers.

Judge Raises Questions About SEC’s Approval Process

  • During the hearing, U.S. District Judge Katherine Polk Failia expressed skepticism about the SEC’s stance, questioning why the agency did not intervene if Coinbase’s business structure was potentially violative of securities laws.
  • The judge suggested that the SEC should have warned Coinbase about potential issues with its assets or advised it to register as a securities exchange.
  • The SEC trial counsel did not directly address the judge’s questions.

Coinbase Seeks Early Dismissal of SEC Case

  • Coinbase is seeking an early dismissal of the SEC case against it, arguing that its business structure and planned activities were thoroughly disclosed to the agency before its IPO.
  • The SEC initially charged Coinbase for alleged unregistered securities offerings dating back to 2019.

Hot Take

The SEC’s argument that approving an S-1 filing does not indicate compliance raises concerns about the agency’s role in protecting investors. If the SEC allows supposedly non-compliant businesses to go public, it undermines its mission and potentially puts consumers at risk. Judge Failia’s skepticism and questions highlight the need for more transparency and due diligence in the SEC’s approval process. Coinbase’s push for an early dismissal shows its confidence in its compliance efforts. It remains to be seen how this case will unfold, but it’s clear that the crypto industry is closely watching the outcome.


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