Coinbase’s CLO Utilizes Bump Stock Gun Case in Battle Against SEC – Here’s the Implication!

Coinbase’s Chief Legal Officer, Paul Grewal, has taken a bold stance in the company’s legal battle with the Securities and Exchange Commission (SEC). In an effort to counter the SEC’s multiple lawsuits against participants in the crypto industry, Grewal drew parallels to a recent Supreme Court case involving bump stock guns.

Grewal recently found himself in a legal tangle with a US court ruling that favored the SEC. The ruling classified certain crypto assets traded on secondary markets as securities, a decision that Grewal criticized. He pointed out inconsistencies and a lack of transparency in regulatory enforcement, using the Supreme Court case involving bump stock guns as an example.

In a post on X, Grewal referenced a conversation between Justice Gorsuch and a government official regarding the bump stock gun case. He also highlighted the abrupt change in how the government interprets a law from the 1930s. Grewal questioned the fairness and lack of opportunity for individuals to defend themselves, emphasizing the SEC’s tactic of obtaining default judgments as hindering defendants from presenting their case and resulting in an unfair legal process.

Grewal’s criticism extended to the SEC’s handling of the Binance Holdings case. In the court filing, the SEC accused former Coinbase employee Ishan Wahi and others of insider trading. The SEC alleged that Wahi shared confidential Coinbase information with his brother and friend, leading to insider trading. The SEC cited a prior ruling by Judge Rakoff in their case against Terraform Labs and Do Kwon to support their position. In that case, tokens like LUNA and MIR were classified as securities, providing additional support for the SEC’s stance on the nature of crypto assets traded on platforms.

However, Judge Tana Lin’s ruling confirmed that the trading of certain crypto assets on a secondary exchange should be considered securities. This decision was based on the SEC’s argument that these crypto assets were initially offered and sold as investment contracts, meeting the criteria outlined in the Howey test.

These legal developments have significant implications for the cryptocurrency industry and Coinbase’s ongoing legal battles. Grewal’s outspoken stance contributes to the ongoing discussion surrounding regulatory oversight and enforcement in the rapidly evolving landscape of digital assets.