Coinbase CLO Calls Out SEC’s “Bullying” Tactics Against Crypto

In a wide-ranging interview with Anthony Pompliano, Coinbase Chief Legal Officer (CLO) Paul Grewal shed light on the regulatory hurdles facing the crypto industry. He outlined his vision for a balanced approach to crypto regulation in the United States.

Moreover, Grewal emphasized the importance of protecting innovation while maintaining investor safeguards. He criticized what he described as overreach by agencies like the U.S. Securities and Exchange Commission (SEC).

Coinbase CLO On Regulatory Overreach

Grewal pointed to the last three and a half years as a period of intensified regulatory hostility, stating, “There’s been a concerted effort to use seemingly neutral rules to undermine an important American innovation.” He criticized SEC Chair Gary Gensler for failing to promote blockchain innovation, despite his background in the field. Grewal noted that the SEC’s actions, including lawsuits and restrictive rules, are “not just contrary to law but frankly un-American.”

Allegations of Bullying

Grewal accused the SEC and other regulators of employing underhanded tactics. He highlighted instances where regulators informally pressured banks to avoid crypto-related services, calling it “bullying.” He described one such instance: “Instead of sending a formal letter, they suggest, ‘I can’t stop you, but you may find yourself on the receiving end of an audit with 97 questions due by Monday.’”

Somehow in 48 minutes @APompliano covered everything from Operation Chokepoint 2.0, to Tornado Cash, SEC overreach, the incoming pro-crypto Congress, and how we balance consumer privacy with law enforcement requests for info. Thx for the chat Pomp. 1/2

— paulgrewal.eth (@iampaulgrewal) January 9, 2025

Thus, Coinbase has responded to regulatory challenges by adopting a proactive legal strategy. Grewal revealed that the company had over 30 meetings with the SEC to discuss registration requirements but was ultimately dismissed without progress. “We were thanked for our time and told they weren’t interested in pursuing this further,” he said. Coinbase has also filed lawsuits under the Freedom of Information Act (FOIA) to uncover documents revealing the extent of regulatory interference.

Tornado Cash Case

Grewal discussed Coinbase’s involvement in the legal challenge against the U.S. Treasury’s designation of Tornado Cash, a privacy-focused crypto protocol, as a sanctionable entity. He criticized the Treasury’s move as unprecedented and legally unfounded. “This was the first time software itself was sanctioned, and we thought it was important to establish a precedent that prevents such actions in the future,” Grewal explained.

Optimism for 2025

Looking ahead, Grewal expressed optimism about the incoming administration under Donald Trump, describing it as the “most pro-crypto administration in history.” He anticipates “sensible rules” for crypto markets, stablecoins, and securities transactions, alongside a balanced approach to regulation. “We’re going to see a return to a more pro-America, pro-innovation view,” he predicted.

Coinbase’s Role in the Industry

Grewal emphasized Coinbase’s commitment to transparency and trust, highlighting its unique approach to engaging directly with the public through social media and other platforms. “Explaining the work we do is as important as doing the work,” he said.

Despite the challenges, Grewal remains optimistic about the future of crypto in the United States. “It’s not just a privilege and an honor; it’s a lot of fun and meaningful,” he concluded, reiterating Coinbase’s dedication to fighting for a fair regulatory environment.

Also Read: Gary Gensler Breaks Silence on Crypto’s Future Amid SEC Exit Countdown