SEC accused of ‘gaslighting’ in Coinbase rulemaking dispute

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In the ongoing legal dispute between Coinbase and the United States Securities and Exchange Commission (SEC), pro-XRP lawyer John Deaton accused SEC Chair Gary Gensler of gaslighting the public and disagreed with his stance on cryptocurrencies.

The accusation comes amid the SEC rejecting Coinbase’s crypto rulemaking petition for three reasons: applying current securities laws to cryptocurrencies, the SEC’s engagement with the crypto securities markets through rulemaking, and the significance of preserving the commission’s discretion in establishing its rulemaking priorities.

In a post on X (formerly Twitter), Deaton emphasized Gensler’s statement outlining the reasons for the SEC’s decision, where the SEC chair states, “there is NOTHING unique or new about cryptocurrencies.” Gensler added that Coinbase’s rulemaking request relies on the belief in the distinctiveness of the crypto ecosystem concerning asset volatility and the categorization of all assets as securities under current laws.

According to Deaton, this stance directly opposes the SEC chair’s statements during his congressional testimony earlier in 2023. Deaton recalled Gensler asserting that crypto lies beyond the commission’s scope due to its unique nature, creating a regulatory gap.

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Deaton stated that Coinbase’s request relied on the SEC’s perspective, as evidenced by prior communications. He noted Gensler’s complete reversal on the crypto issue, attributing it to political motives and backing from Senator Elizabeth Warren.

Related: SEC officials meet again with spot Bitcoin ETF filers

The SEC has been sending different signals about its approach to the cryptocurrency ecosystem, either through Gensler’s words or the commission’s actions in general.

Amid ongoing legal disputes with Coinbase and Binance, the regulatory body declined to appeal its defeat against Grayscale Investments. The case involved the company’s attempt to transform its Grayscale Bitcoin Trust into a spot exchange-traded fund.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?