It is very likely that the Securities & Exchange Commission of the US (SEC) may take enforcement action against Coinbase. Although Coinbase is a NASDAQ-listed crypto company, it is not free from supervisory control by SEC.
There is a court case filed by a person named Craig Wright, which is pending in a Court of Law in the US. Wright claims himself to be the inventor of Bitcoin but the world does not recognize him as Bitcoin’s genuine creator. Wright has several times failed to meet the challenge which the public asked him to take on to prove he is Bitcoin’s creator. Even then he continues to bring up court cases very frequently and the cases do have some legal complications for others.
Wright and his team of attorneys have been sending warning notices to crypto trading platforms against the publication of Bitcoin white papers. In these warnings, Wright has been making claims that Bitcoin’s white paper, as well as Bitcoin’s network, are both properties of Wright. Therefore, nobody is allowed to use them without his permission. Similar warning notices were also issued to Coinbase, however, Coinbase neglected the notices and continues to trade in Bitcoin.
Whatever be the outcome of Wright’s court cases and legal claims, but the issue is Wright has raised a claim whose decision is pending. It is to be decided by the Court whether Wright has any legitimate claim over the property rights on Bitcoin’s white paper and its blockchain network. Until then, it is inappropriate to assume something otherwise. Wright could ask the Court that since the matter is pending, Coinbase should be stopped from publishing Bitcoin’s white paper from its website. In addition, he can seek direction from the Court to stop Coinbase from using the Bitcoin network as well as suspend Bitcoin trading.
However, the chances of the Court passing such directions are very thin, yet one cannot be certain about the outcomes of the case. So eventually there is a risk for the customers of Coinbase who are engaged in Bitcoin usage and its trading. This very risk hasn’t been disclosed by Coinbase to its customers and this fact has been duly noticed by SEC. Though it is obvious that Coinbase denies claims raised by Wright but it has not responded to the warnings legally. Nor is Coinbase party to the proceedings which are pending in a US Court.
So the risk is there, although less under the SEC rules and regulations, Coinbase is bound to make full disclosure of risks to its customers. This disclosure in fact hasn’t been made by Coinbase to date. In this situation, there is every likelihood that SEC may be initiating enforcement action against Coinbase. It is anticipated that SEC might be making a move anytime which would make things difficult for the crypto trading firm.
