Coinbase Chief Legal Officer Paul Grewal called on US SEC Chairman Gary Gensler to stop misleading the market about the legal status of cryptocurrencies in a social media post from US SEC Chairman Gary Gensler.
Grewal made the statement in response to Gensler’s recent CNBC interview with Andrew Sorkin, in which he claimed that numerous digital assets fall under the category of securities under existing law.
However, Grewal countered that the SEC chairman’s claims were false as the watchdog’s lawyers have previously acknowledged that cryptocurrencies do not fall under the definition of securities.
In his message to Gensler, Grewal stated unequivocally:
“Please stop misleading the market – tokens are NOT securities. Despite their pleas, your own lawyers admitted this in court.”
Inadequate cryptocurrency disclosure
Meanwhile, Gensler reiterated his well-known position that most cryptocurrencies are securities tokens in his CNBC interview, adding that they often lack the necessary disclosures intended for assets in this class.
According to the SEC Chairman:
“Without prejudging any of them, many of these tokens are securities under the laws of the land as interpreted by the U.S. Supreme Court. So we follow that law, and you, the investors, are not getting the required or necessary disclosures about those assets.”
While Gensler has not specified which cryptocurrencies he considers securities, recent regulatory actions suggest that all major tokens, with the exception of Bitcoin, are under scrutiny.
Since assuming the role of SEC chairman, Gensler has prioritized bringing cryptocurrencies within the commission’s regulatory purview, citing the Howey test as a benchmark for determining the status of securities.
Critics have criticized Gensler’s enforcement-focused approach and instead called for legislative clarity from Congress. However, progress on crypto-related legislation has been slow, perpetuating uncertainty in the sector.
Several crypto entities, including Binance, Coinbase and Ripple, are embroiled in legal battles with the Gensler-led committee. Moreover, in the past month, the financial watchdog has issued Wells Notices to other major crypto companies, such as Uniswap, Consensys and digital trading platform Robinhood.