(Bloomberg) -- Coinbase Global Inc., the largest US crypto trading platform, isn’t waiting for the SEC to make the first move in what is expected to be a prolonged legal battle between the two. 

The digital-asset firm asked a court Monday to compel the US Securities and Exchange Commission to respond to a rulemaking petition the company submitted last year. The company, in a lawsuit filed with a federal appellate court in Philadelphia, argued that the agency hasn’t been reasonable or prompt in providing a response.

“Not only have we been waiting for many, many months, but there’s been a campaign of enforcement that the SEC has embarked upon in parallel,” Coinbase’s Chief Legal Officer Paul Grewal told Bloomberg News in an interview. 

A representative for the SEC declined to comment. 

The suit likely risks driving even more of a wedge between the company and the SEC — escalating tensions that have already been on the rise since the regulator gave Coinbase a heads up last month that it intends to bring an enforcement action against the firm. 

Coinbase’s rulemaking petition called on the SEC to write regulations explaining how securities laws apply to cryptocurrency and to engage in a formal notice-and-comment process to allow the public to weigh in. SEC Chair Gary Gensler, who has said most digital assets are securities, has repeatedly stated that he thinks existing rules are clear and that crypto firms just refuse to follow them. 

Coinbase followed up its petition with a comment submitted to the agency last month asking for more clarity on the SEC’s views on staking services, which allow users to earn rewards in exchange for allowing their tokens to be used to order transactions on a blockchain. 

But instead of responding to the company’s petition, the SEC shortly thereafter presented Coinbase with a Wells notice, signaling that it plans to sue over a range of potential issues, including a portion of the exchange’s listed tokens and its staking service Coinbase Earn.

It’s not the first time the SEC and Coinbase have been at odds. 

For years, Coinbase positioned itself as the US’s most compliant crypto exchange that works closely with regulators. But cracks in the company’s relationship with the SEC began to show in 2021, when Coinbase received a Wells notice from the agency signaling its intent to sue over a planned coin-lending product. The firm ultimately decided not to introduce the product, but CEO Brian Armstrong fired off a slew of tweets at the time sharply criticizing the regulator.

In the tweets, Armstrong accused the SEC of “some really sketchy behavior” and said it wasn’t clear how to comply with the agency’s rules.    

The APA challenge is the latest development in the Coinbase-SEC saga. The Administrative Procedure Act lays out processes government agencies must follow when they develop and issue regulations. It also offers pathways for the public to challenge regulatory decisions and to petition an agency to issue, amend or repeal a rule. Agencies aren’t required to grant petitions but they do have to consider them and respond “within a reasonable time.”

If the SEC believes that new rules shouldn’t be issued for crypto, it should respond to the petition and say that, Grewal said. That way, Coinbase would have the opportunity to challenge the assessment in court, he said. 

“What the SEC chair is doing is depriving the third branch — the US courts — from a chance to exercise their authority to evaluate whether he got it right or he got it wrong,” he said. 

Coinbase is among many crypto companies that have been on the receiving end of increased scrutiny from the SEC following turmoil in the markets last year, which resulted in the collapse of several firms such as Sam Bankman-Fried’s FTX. Kraken settled with the agency earlier this year over its staking service and agreed to stop providing the program in the US. Bittrex Inc. was sued recently for allegedly operating an unregistered securities exchange, broker, and clearing agency.

Amid the regulatory crackdown, many exchanges, including Coinbase, have said they’ve been exploring and speeding up plans for expanding overseas. 

(Adds SEC declined to comment in the fourth paragraph.)

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