The Third Circuit Court of Appeals granted Coinbase’s petition for a writ of mandamus, requiring the SEC to justify its denial of clear crypto regulations.
While hailed as a victory by crypto advocates, some legal experts view it as a minor procedural win with potential broader implications for crypto regulation.
In the ongoing legal battle between Coinbase and the U.S. Securities and Exchange Commission (SEC), a major legal milestone has been met.
Paul Grewal, the chief legal officer of Coinbase, said on the social media site X on Monday that the Third Circuit Court of Appeals had approved the company’s request for a writ of mandamus. Grewal told us:
We just won our petition for a writ of mandamus at the Third Circuit.
“Rebuking the SEC for its order denying our rulemaking petition, the Court held that the ‘SEC’s order was conclusory and insufficiently reasoned, and thus arbitrary and capricious, we grant Coinbase’s petition in part and remand to the SEC for a more complete explanation,’” the Coinbase legal chief added.
The Third Circuit Court of Appeals issued a writ of mandamus telling the SEC to explain its acts in a way that makes sense.
Crypto Advocates Applaud Court Ruling Against SEC in Coinbase Case
After the SEC turned down Coinbase’s rulemaking petition, which asked for clear rules for the bitcoin industry, without giving a good reason, the company asked for this remedy.
A number of crypto supporters and law experts agree with the decision. “In Gensler’s last days, his anti-crypto crusade is imploding, and a federal appeals court has laid bare what the industry has said for years: his selective enforcement of securities laws was a (not so) covert attempt to ban the industry outright,” said Stuart Alderoty, general counsel at Ripple. What a shame.
Jake Chervinsky, who is in charge of policy at the Blockchain Association, said that the ruling was revolutionary. He wrote, “Congratulations and thanks to Coinbase for this victory over the SEC.” He went on to explain:
This is a particularly big win since it comes from a circuit court, where binding precedent is set, but few crypto cases have gone up on appeal. Bit by bit, the judiciary is reining in the administrative state.
But some lawyers, like Fred Rispoli, saw the decision as a loss for Coinbase because the company lost most of its cases and only got a small win near the end of the ruling.
He said that the SEC’s failure to give a good reason for turning down Coinbase’s plea could be easily fixed when the case was sent back to be heard again.
Even so, Rispoli emphasized how important Judge Stephanos Bibas’s concurring decision was. It said that old rules don’t work well with new technologies like cryptocurrency. He said that if the 2nd Circuit follows the same line of thinking, it could make the SEC’s method to regulating cryptocurrency much weaker.
