SEC’s deadline extension is a ‘fork’ in case against Coinbase — John Reed Stark

The US Securities and Exchange Commission’s lawsuit against Coinbase could be dead in its tracks as the regulator’s newly established Crypto Task Force seeks to resolve prior enforcement action against the exchange, according to former SEC official John Reed Stark.

In a Feb. 17 post on the X social media platform, Stark explained why the SEC requested a 28-day extension to answer Coinbase’s petition asking for permission to appeal.

“Per the unprecedented 3-page joint motion, the SEC’s review of crypto-related issues is ‘ongoing,’ and the extension will give the SEC time for ‘appropriate review’ as it prepares its answer to the Coinbase petition,” Stark said.

In other words, “Stick a fork in the SEC’s case against Coinbase, it’s done,” he said.

The SEC sued Coinbase in June 2023 over allegations that the company was operating an unregistered broker and exchange. As part of its response, Coinbase said crypto trades should not be considered securities.

In Stark’s estimation, the same outcome awaits the SEC’s case against crypto exchange Binance. He cited a joint motion submitted on Feb. 11 where both parties argued that the SEC’s Crypto Task Force “may impact and facilitate the potential resolution of this case.”

The same holds true for Ripple, which has been mired in a lawsuit with the SEC since 2020.

“Expect all crypto-related appeals, including the appeal of the Ripple matter, to pause or even more likely, to be fully withdrawn.”

Stark worked as the chief of the SEC’s Office of Internet Enforcement for 18 years while simultaneously serving as a law professor at Georgetown University. He now operates a consulting firm.

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Crypto Task Force to bring regulatory clarity

The SEC’s Crypto Task Force was established on President Donald Trump’s second day in office and is being headed by the pro-crypto Hester Peirce, who has vowed to clean up the “mess” left behind by the previous regime. 

The task force appears to be living up to that promise. Earlier this month, it met with several crypto industry participants from the blockchain and traditional finance spaces, who sought clarity on a range of regulatory issues, including guidelines for exchange-traded products, broker-dealers and protocol staking.

The Blockchain Association, an industry group with nearly 100 members, called on regulators to “review and correct erroneous interpretations of law” made by the SEC’s previous administration. 

In addition to the Blockchain Association, the task force met with representatives from Nasdaq, Andreessen Horowitz, Multicoin Capital, Jito Labs and Sullivan & Cromwell in early February. 

Related: Trump’s crypto ventures raise conflict of interest, insider trading questions