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.
Source: The Irony of Coinbase’s “Regulatory Estoppel” Defense | John Reed Stark
