Paul Grewal, the Chief Legal Officer of Coinbase, has raised concerns about the inconsistent approach of the U.S. Securities and Exchange Commission (SEC) in classifying cryptocurrencies. Grewal highlighted what he calls a double standard in the way the SEC argues whether crypto assets should be classified as securities in different legal cases.

Coinbase CLO's Criticism of SEC's Cryptocurrency Classification Confusion

In a recent tweet, Grewal referenced the LEJILEX case and pointed out inconsistencies in the SEC's arguments. According to the SEC's statement on October 2, the agency argued that "whether a digital asset transaction is a securities transaction does not depend on the nature of the asset itself."

However, Grewal claims that in the ongoing Coinbase case, the SEC has taken an entirely contradictory stance. In this case, the agency argued that "crypto assets are different from tangible assets, such as real estate," which makes them more likely to be considered securities.

“This is our government acting on behalf of all of us. Telling one judge one thing and another judge the exact opposite shouldn’t be tolerated. We deserve better,” Grewal stated.

Impact on the Broader Cryptocurrency Market

The SEC's inconsistent position could have serious consequences for the broader #cryptocurrencymarket , especially as regulatory scrutiny continues to tighten. According to Grewal, this is not just a technical issue but one that raises concerns about fairness and transparency in the regulatory process.

Appeal in the Ripple Case

On Wednesday, the SEC made another significant move in its case against Ripple, filing an appeal against Judge Analisa Torres' July 2023 ruling. This decision had classified #Xrp🔥🔥 , Ripple's native digital token, as not being a security when sold to retail investors.

However, the court ordered #Ripple💰 to pay a $125 million fine for selling XRP to institutional investors, classifying those transactions as securities sales. The case remains unresolved as the #SEC now challenges the court’s decision, seeking to overturn the ruling and reaffirm its authority over the classification of digital assets.

Response to the Appeal from Coinbase CLO

The SEC's appeal also drew a response from Grewal. In reply to Ripple CLO Stuart Alderoty’s post about the appeal, Grewal wrote: “If the law is as clear as the SEC always claims, why ask the appeals court for clarification? But fine – let the Second Circuit finally confirm that token trades on secondary markets are NOT investment contracts.”



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