Coinbase’s Legal Chief Criticizes SEC’s Ambiguity on FTX’s Repayment Plan

Coinbase’s Chief Legal Officer, Paul Grewal, has openly criticized the U.S. Securities and Exchange Commission (SEC) for its vague position regarding FTX’s plan to repay creditors using stablecoins or other cryptocurrencies. This criticism highlights the growing frustration within the cryptocurrency community over the lack of clear regulatory guidance from federal authorities.

SEC’s Ambiguous Stance on FTX’s Plan

FTX, which is currently undergoing bankruptcy proceedings, proposed a plan to repay its creditors using stablecoins or other crypto assets. However, the SEC’s response to this plan has been notably ambiguous. In a recent filing, the SEC did not directly declare these transactions illegal but reserved the right to challenge them under federal securities laws. This ambiguous stance has left many in the crypto community uncertain about the legality of such transactions.

Grewal expressed his concerns on the social media platform X, stating, “The SEC didn’t outright state that such an action would be illegal.” He further criticized the SEC for its reluctance to provide clear guidance, asking, “Why offer clarity to the market when threats and ambiguities suffice?” Grewal emphasized that investors, consumers, and markets deserve better, more transparent regulations from federal agencies.

The lack of definitive guidance from the SEC on the legality of crypto asset transactions has long been a point of contention in the cryptocurrency industry. As FTX continues its liquidation process, the company plans to sell assets and may distribute stablecoins to creditors. The SEC, however, has not taken a firm legal stance on these transactions and has reserved the right to challenge them if necessary.

In addition to its ambiguous position, the SEC has requested changes to FTX’s liquidation plan, including the removal of a discharge provision, and has indicated that it may oppose the plan if these changes are not made. Grewal’s criticism underscores the need for clearer regulatory frameworks to ensure the stability and transparency of the rapidly evolving crypto market.