Crypto exchange Coinbase may have a ‘fatal flaw’ in its alleged violations of securities law, according to James Murphy, the founder of law firm Murphy & McGonigle. The law firm, which pivoted towards blockchain tech in 2017, represents emerging companies in the securities and banking industries. The Securities and Exchange Commission (SEC) sent a Wells Notice, which typically precedes a lawsuit, to Coinbase earlier this year regarding its securities business. Murphy suggests the SEC is likely to lose the case as SEC Chairman Gary Gensler previously said in May that the SEC does not have authority to regulate cryptocurrency exchanges. Gensler was sworn into office on 17 April 2021, after confirmation by the US Senate on 14 April 2021. If the SEC goes ahead with the lawsuit and fails, it would be highly embarrassing considering Gensler’s testimony and the discovery that would follow from all of the communication within the trading watchdog.
