Coinbase CLO Slams US SEC for Stopping FTX On Crypto Repayments

US SEC insisted on its authority to review the validity of the conducted crypto transactions as a part of the FTX exchange’s reorganization proposal. The SEC has warned FTX against repaying the creditors in stablecoins or other tokens of digital currencies.

The regulatory, it opposed one of the clauses that would have shielded FTX from possible future lawsuits by creditors. Having expressed dissatisfaction at the SEC’s stand, Paul Grewal came out squarely to condemn the regulator for adding confusion on the rules governing the use of cryptocurrencies.

Recently the U. S. Securities and Exchange Commission (SEC) has informed the now-bankrupt crypto exchange FTX of repaying the victims in stablecoins or other cryptocurrencies. Coinbase CLO Paul Grewal has now criticized the US SEC saying that the agency has a unique interest in keeping investors guessing on the regulatory status of cryptocurrencies.

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US SEC Contradicts FTX Repayment Proposals

From the bankruptcy case of the victims, the crypto exchange FTX has been in the process of coming up with the repayments. Some creditors have also wanted to be paid back in kind, that is, in another crypto against the holding of the cryptos. Some bankrupt crypto lenders such as Genesis and BlackFi have been in a position to achieve this successfully.

Nevertheless, FTX has chosen to pay out the creditors in either, fiat money or stablecoins tied to the US dollar. However, in its recent filing, the US SEC has warned the exchange that it can challenge the legality of repaying the claims or earning profits with their possession of ‘crypto-asset securities’.

In addition, the agency’s filing highlights that the plan does not specify who would take on the task of issuing stablecoins if the regulator approves this aspect. Thus, keeping up the tradition of not making too much distinction, the US SEC failed to categorically say that there would be such a plan illegal. It noted:

Coinbase CLO Criticizes SEC Over Stance on FTX Bankruptcy Strategy

In addition, Officials like the U. S. The Trustee and the SEC opposed one of the discharge provisions that would grant the FTX debtors immunity from any future legal action by creditors. The U. S. Trustee has filed a motion to the court for an order to deny the confirmation of the plan at hand. The regulatory agency has recently been criticised by the CLO of Coinbase.

Coinbase’s Chief Legal Officer, Paul Grewal criticized the SEC recently over its stance on FTX’s bankruptcy strategy. He also pointed out on the same that the agency has not explained the legitimacy of the transactions taking place.

Grewal questioned why the US SEC chose to threaten rather than guide, in response to regulators claiming authority to preemptively reserve crypto transactions. He especially pointed out that “Markets, consumers, and investors need far more; much, much more.”