U.S. Sen. Bill Hagerty told U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler he can “expect to hear from Congress” regarding the SEC’s recent actions targeting the crypto industry. Tennessee’s junior senator tweeted his message in response to a barrage of lawsuits the SEC filed against leading cryptocurrency firms, including U.S.-based Coinbase, which the SEC allowed to go public in 2021, was prevented from registering and has since been sued by the SEC.
"The @SECGov is weaponizing their role to kill an industry. Allowing a company to list publicly and then stonewalling their attempts to register is indefensible. @GaryGensler, expect to hear from Congress," Hagerty wrote in a June 6 Twitter post.
On June 6, the SEC filed a lawsuit against Coinbase, alleging that the company has been operating unlawfully as a crypto exchange since 2019, according to a press release from the SEC.
In a blog post issued in March after the SEC first notified Coinbase of an upcoming enforcement action, Coinbase emphasized the fact that the SEC allowed Coinbase to go public in 2021.
"Although we don’t take this development lightly, we are very confident in the way we run our business – the same business we presented to the SEC in order for us to become a public company in 2021," Coinbase's Chief Legal Officer Paul Grewal said in the post.
Coinbase CEO Brian Armstrong also highlighted the SEC's approval for Coinbase to go public, saying in a June 6 tweet, "The SEC reviewed our business and allowed us to become a public company in 2021." Armstrong criticized the SEC's "regulation by enforcement" approach to the crypto industry and said, "There is no path to 'come in and register' - we tried, repeatedly."
Bloomberg Opinion columnist Matt Levine, a former attorney and investment banker, said the "SEC’s complaint against Coinbase is very dry and focused entirely on the fact that Coinbase did not register as a securities exchange. Again, in the SEC’s view, every crypto exchange is violating U.S. securities law."
Levine said the "key legal question" at the heart of the lawsuit is whether digital assets are securities, commodities or something else. If they are securities, Levine said, then Coinbase and every other crypto exchange is operating illegally.
"If they are not securities then everything’s fine," Levine said. He noted that the SEC believes most digital assets are securities, while Coinbase believes they are not.