SEC’s Coinbase investigation is a sign of more fights to come

A charming hello, and welcome to Protocol Fintech. This Monday: Coinbase gets ready to rumble, Biden is getting a blockchain buddy and Binance continues to grow.

chain off

The White House is Hiring a Blockchain Expert. A provision in the Chips and Science Act directs the director of the Office of Science and Technology Policy to “establish or designate blockchain and cryptocurrencies advisory specialist status.” Hawn Ventures ‘Tomica Tillman’ assessed With Rep. Darren Soto bringing that language into the bill. So who will bend President Biden’s ears about bitcoin?

— Owen Thomas (E-mail , Twitter,

Coinbase is ready for battle

On July 21, accusing a former Coinbase employee of insider trading, the SEC fired an opening salvo in a major legal dispute with the crypto powerhouse over a key question: Are crypto tokens securities?

Actually, the fight was already going on. Before the inside case came to light, the SEC was investigating Coinbase for alleged securities laws violations, setting the stage for a confrontation that would define not only the future of the company but the future of the entire crypto industry. could.

Coinbase immediately indicated plans to fight back. Chief Legal Officer Paul Grewal explicitly declared that “Coinbase does not list securities. End of story.”

  • Grewal and Chief Policy Officer Faryar Shirzad, generals at Coinbase in the fight with the SEC, also highlighted key arguments for the company’s legal counterclaim.
  • The SEC Insider Trading Complaint stated that seven of the nine digital assets were securities, seven of which were traded on Coinbase. Grewal added that the company has a “rigorous process to analyze and review each digital asset before making it available on our exchange – a process that has been reviewed by the SEC itself.”

Coinbase may have suggested that it had SEC approval. According to a company representative, Grewal was referring to an SEC review of Coinbase’s IPO filing last year. The SEC declined to comment.

  • It is unclear whether the issues the SEC will consider in reviewing a company’s financial reporting prior to an initial public offering have much to do with the question of whether digital assets are securities, even if the same agency is in both cases. I inspect.
  • John Reed Stark, the former head of the SEC’s Internet Enforcement Office, said Grewal’s statement was misleading. “What they’re saying implies some kind of acceptance,” he told Protocol.
Read |  Coinbase will reach 1 billion users by 2030, says CEO Brian Armstrong

The real question remains, are cryptocurrencies securities? As SEC chairman, Gary Gensler has made his point clear: In most cases, yes, they are.

  • This stance predates their arrival – under Jay Clayton, the agency sued Ripple on the grounds that XRP was an unregistered security.
  • The long-standing judicial standard used by the agency, which is now being applied to crypto, is called the Howe test, which looks at whether people invest money in something with the expectation of profiting from the efforts of others. are or not.
  • Coinbase has argued that the existing rules are out of date and make no sense. “The securities law is … not suitable for regulating digital assets,” Shirazad wrote in a proposal to a separate federal regulator in charge of crypto.
  • On the day the SEC announced the insider trading complaint, Coinbase filed a petition asking the SEC to begin creating regulations for digital asset securities. It is unusual for a company to make such a petition – usually by the trade association or Congress itself.

Grewal said the company “cooperated” with the SEC’s investigation of a former Coinbase employee. But he complained that “instead of negotiating with us, the SEC jumped straight into litigation.” Omid Malekan, who teaches blockchain and cryptocurrencies at Columbia Business School, said there is an ongoing debate in crypto about “whether Coinbase’s fault was trying to play with the rules” with an agency that was already against them. . If Coinbase’s new belligerent stance is anything to take away from it, the company may think it has little to lose from the confrontation.

— Benjamin Pimentel (E-mail , Twitter,

A version of this story first appeared on Protocol.com. Read it here.

on money

On protocol: After warning crypto lender Voyager Digital for “false and misleading” statements on the subject, the FDIC said banks need to stop their crypto partners from unfairly insuring their assets.

Binance and FTX are taking a bigger slice of the crypto trading pie. Binance’s spot-trading market share increased to 49.7% in June from 45% in January, while FTX increased its market share to 8.95% in June, up from 6% in January.

Charles Schwab is launching his first crypto ETF. The Schwab Crypto Thematic ETF will offer “exposure to companies that may benefit from the development or use of the cryptocurrency” separately from the spot bitcoin ETF, which the Securities and Exchange Commission has outright rejected.

Uber is planning a Pro version of its driver debit card. CEO Dara Khosrowshahi said the company is working with Mastercard, Branch and Marketa on a new Uber Pro debit card and checking account that will offer drivers 7% cash back on gas (for those with Diamond status). Uber launched a debit account with GoBank in 2016.

CoinFlex is the latest crypto company to make layoffs. The exchange said it had let go of a “significant” part of its team in an effort to cut operating costs after halting withdrawals in June.

Apple is looking for Web3-savvy marketers. The job listing reveals that Apple is seeking an associate creative director candidate with “demonstrated interest in interactive platforms and Web 3.0” and an art director with “demonstrated interest in Web 3.0”, although Apple removed the second ad. Gave.

heard

“Am I remembering wrong?” It’s a Testimonial Moment on the Judge’s Side Sarah Netburn, who is overseeing the SEC v. Ripple case, as he questioned public prosecutors about the “hypocrisy” in their arguments. Representative Jeremy Hogan Netburn’s Courtroom Lectures has good information.

Robin Hoodabout getting people excited about stocks, but the CEO Vlad Tenev At least when it comes to his company’s stocks, advises Zen. “You can’t run a business, or really live your life, how the stock market is doing to your emotions,” He told Bloomberg.

Read |  Anonymous crypto wallet moves $47M worth of bitcoin to Coinbase

sensor dick durbin, Elizabeth Warren And Tina Smith Don’t look at bitcoin as something to retire from. in a recent letter fidelity to truth CEO Abigail JohnsonSenators asked why the firm was allowing “Such volatile, illiquid and speculative assets in 401(k) plans.”

is coming

Senate Committee on Banking, Housing and Urban Affairs to hear In the housing market on Tuesday. The hearing, titled “The Rent Eats First,” will include commentary from academic researchers, small and large-scale rental property owners and the presidents of the Port of Greater Cincinnati Development Authority and the National Low Income Housing Coalition.

Also on Tuesdays, PayPal reports earnings. The consensus EPS forecast for the company for the quarter is $0.54, compared to $0.88 for the same quarter last year.

On Wednesday, Robinhood and eBay are set to report their earnings. Robinhood’s EPS forecast is $-0.31, up from $0.11 for the same quarter last year. The consensus EPS forecast for eBay is $0.70, compared to $0.82 for the quarter last year.

The Block will report earnings on Thursday. The EPS forecast for SQ for the quarter is -$0.21, where it was $0.38 for the same quarter last year.

Also on Thursday, the Senate Committee on Banking, Housing and Urban Affairs will host a hearing on the “economic cost of climate change.” Just a week after Senators Joe Manchin and Chuck Schumer reached an agreement on some climate provisions for the Inflation Reduction Act, a Senate committee will examine the other financial implications of climate policy.

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