Coinbase Stands Tall: Requests US Judge to Dismiss SEC Lawsuit
Coinbase Global (COIN.O), the world’s premier publicly traded cryptocurrency exchange, pleaded with a judge to terminate the Securities and Exchange Commission’s (SEC) lawsuit on Friday.
The SEC had indicted Coinbase of contravening federal securities laws, an accusation Coinbase has vehemently disputed.
The epicenter of the dispute lies in a filing in a Manhattan federal court. Coinbase contends the SEC lacks the jurisdiction to carry out the lawsuit.
The crux of the argument is that the digital assets and the services which have drawn SEC’s attention don’t fall under the ‘securities’ category, thereby making the agency’s efforts an overreach.
Coin Base’s Chief Legal Officer Steps In
In a strong-worded post on X, formerly known as Twitter, Coinbase’s Chief Legal Officer, Paul Grewal, elaborated on the company’s central argument. “Our core argument is simple – we do not offer ‘investment contracts’ as that term has been construed by decades of Supreme Court and other binding precedent,” he claimed.
The SEC, on their part, chose not to comment beyond their public filings.
Coinbase’s run-in with the SEC started in June when the exchange was accused of operating as a national securities exchange, broker, and clearing agency without the requisite registration with the regulator.
This marked a new high in the ongoing tensions between the crypto sector and the apex U.S. markets regulator, which has initiated several lawsuits against global crypto platforms.
The SEC’s argument hinges on the platforms’ need to register and function similarly to entities dealing in traditional securities like stocks or bonds. The crypto sector, in contrast, argues for the need for fresh legislation.
Recently, two Manhattan federal judges had differing opinions in SEC lawsuits against cryptocurrency companies Ripple Labs and Terraform. The disagreement was over the question of whether the SEC had overstepped its bounds by attempting to regulate the sector.
In its filing on Friday, Coinbase used the Ripple case as a reference. They pointed out that the SEC’s lawsuit was largely dependent on the nature of transactions that the judge had previously ruled to be beyond the regulator’s control.
Regardless of the outcome, this case will significantly impact how the crypto sector evolves.
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Source: Reuters
