The U.S. Securities and Exchange Commission (SEC) argued in court that the IPO of a company’s S-1 application was not “okay” by the agency or that the company had not been checked for regulatory compliance.

For the sake of transparency, here’s a transcript of yesterday’s hearing in the SEC’s lawsuit against SDNY. We appreciate the court’s careful consideration.

For the sake of transparency, here’s a transcript of our hearing yesterday in the SDNY lawsuit brought against us by the SEC. We appreciate the court’s careful consideration. https://t.co/NEEsr05fos

— paulgrewal.eth (@iampaulgrewal) 14 July 2023

it seems come on documents july 13court hearing SEC – Preliminary motion in Coinbase lawsuit, body says it will It failed to approve Coinbase’s corporate structure when it greenlit it to go public in April 2021..
“Your Honor, I will say that the SEC allowing a company to go public does not mean that the SEC supports the underlying business or the underlying corporate structure, or that the underlying corporate structure does not violate the law.”says SEC Advisor Peter Mancuso, adding:

“There’s no way an S-1 approval is a kind of green light for a company’s entire business. In fact, there’s no evidence that the SEC has reviewed certain businesses and made certain decisions, and then given consensus to Coinbase on that. It’s a headline later. would not prove it.”

On Crypto Twitter, several users, including Gemini co-founder Cameron Winklevoss, highlighted the implications of these statements while wondering why the SEC allowed an alleged noncompliant company to go public. whereas its purpose is to protect US consumers.

So they allow IPOs of illegal businesses and allow Americans to invest in them? haha, SEC got burned

So they’re allowing an IPO for illegal business and allowing Americans to invest in it? lmao seconds cooked

— Metatron (@metatron_0x) 14 July 2023

US-based companies must file an S-1 with the SEC before starting to list shares on a national stock exchange. As part of filing, companies must provide a complete description of their business structure and how the proceeds from the IPO will be used.
Following Mancuso’s comments, US District Judge Katherine Polk Failia said: “Let’s take a break so I can get rid of my doubts on this subject”while asking a few questions.
“I am not saying that the commission should and should know everything when considering a registration statement”added and continued:

“But I would have thought the commission did a thorough review of what Coinbase is doing and somehow the commission would say, you know, you can’t do that. It’s a violation of securities laws, or we’re in interesting unexplored territory as to whether the assets on your platform are securities, so please do a Know that you can be sued one day.”

In response, Mancuso reiterated the SEC’s assertion that S-1 filings are more about approving corporate information than the agency is approving corporate structure.
Failia then asked Mancuso if the SEC had responded to Coinbase: “Hey, you need to register as an exchange”.
“That was within the powers of the SEC, wasn’t it?”He asked.
“I can’t comment on this”Mancuso replied.
The SEC initially accused Coinbase of allegedly unregistered securities offerings dating back to 2019.
Coinbase is seeking an early dismissal of the lawsuit for several reasons, including the SEC’s accusation of the company. Although its corporate structure and planned activities were “extensively disclosed” to the agency prior to Coinbase’s IPO.

The SEC will crumble in court and it won’t end anytime soon.

The SEC is falling apart in court, and it won’t stop anytime soon. https://t.co/jr1jinoc5D

Jake Chervinsky (@jchervinsky) 15 July 2023

Translation of Walter Rizzo