Coinbase Tries Novel Defense in SEC Fight

With the Securities and Exchange Commission preparing an enforcement action that threatens much of its business, crypto exchange Coinbase is trying a novel defense. It says regulators bear some responsibility for letting the company go public in the first place.

Coinbase went public in April 2021 after clearing a six-month review. SEC staff bored into its financial reporting and disclosures as well as the company’s belief that its menu of cryptocurrencies shouldn’t be treated as securities, which the SEC regulates. Coinbase’s lawyers argue that by clearing the review, regulators signaled that they “did not think Coinbase’s core business was unlawful.”