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The U.S. Securities and Exchange Commission (SEC) opposed the bankrupt cryptocurrency exchange FTX’s plan to repay creditors with cryptocurrencies. It requested the court to reject the payments. Coinbase’s Chief Legal Officer Paul Grewal reacted strongly to the issue. The debate’s impact seems to be growing in the cryptocurrency world.
SEC Warns FTX on Crypto Payments
The U.S. Securities and Exchange Commission (SEC) objected to FTX’s plan to repay victims with stablecoins or other crypto assets during its bankruptcy process. The SEC stated it reserved the right to question the legality of such transactions.
FTX planned to repay creditors with cash or dollar-pegged stablecoins, while some creditors demanded payment in crypto assets. However, the SEC’s new filing indicated it reserved the right to assess the legality of such transactions.
Legal Uncertainty Continues
The SEC’s objections included insufficient details of the plan and uncertainty about who would be responsible for distributing the stablecoins. The agency emphasized it reserved the right to challenge the legitimacy of the transactions, even though it did not explicitly state their legality under federal securities laws.
Additionally, the SEC and the U.S. Trustee opposed a provision that would protect FTX from legal actions by creditors.
Coinbase Criticizes: “Investors Deserve Better”
Coinbase Chief Legal Officer Paul Grewal harshly criticized the SEC’s stance. Grewal stated that the SEC should provide clear guidance instead of threatening cryptocurrency transactions. “Investors, consumers, and markets deserve better. Much better,” said Grewal, noting that the regulatory body’s continued uncertainty negatively impacts the markets.
The SEC’s lack of a clear stance on cryptocurrencies causes ongoing uncertainty for both investors and market players. Such an approach by the SEC increases legal uncertainty in the cryptocurrency markets and undermines investor confidence. As Coinbase’s legal representative Grewal pointed out, more transparent and clear regulations are needed to ensure market confidence and stability.
