In its lawsuit with the SEC, Coinbase argues that when Coinbase’s IPO registration went effective, the SEC also approved the bonafides of Coinbase’s business. This week, in a scheduling conference, Judge Katherine Failla, expressed some sympathy for Coinbase’s position, stating:
“It’s not crazy in the Failla parlance for Coinbase’s to think that what they were doing was OK because it was exactly what you [the SEC] let them do when they issued the S-1. That’s the point I am making. You may say that they and I are reading too much into the issuance of the S-1.”
Despite her initial skepticism, I believe Judge Failla will not accept Coinbase’s argument. Why? Because she would be ruling that the SEC has the power to refuse to allow an S-1 Registration Statement to go effective merely because an SEC corp fin staffer thinks the company’s business plan is potentially unlawful. That seems extreme to say the least.
‘Enforcement 40’ for 2020
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