Coinbase Global Inc. said yesterday that it would fight the Securities and Exchange Commission over the agency’s claim that much of its business is illegal and try to convince a court that Wall Street regulators lack the authority to oversee cryptocurrency markets, the Wall Street Journal reported. The company outlined its legal strategy in a memorandum that formally responded to the SEC’s earlier notice of a potential enforcement action against the company. The memo, made public by Coinbase along with a video featuring its chief executive, underscores the company’s effort to generate political backing and public support for its confrontation with the SEC. An SEC lawsuit against Coinbase would threaten the unregulated business model of crypto exchanges, which contributed to their early profitability and rapid growth. If Coinbase loses, it could be forced to register parts of its business with regulators or delist many crypto tokens that regulators say are securities that should have to comply with investor-protection rules. Gary Gensler, the SEC’s chairman, told House lawmakers last month that crypto exchanges are largely noncompliant with laws they are supposed to follow. They may need to delist many tokens they offer and restructure their operations to fit within SEC rules designed to limit conflicts of interest and other risks to investors, he said.
