April 19, 2024
Latest Cryptocurrency News

Coinbase Alleges SEC Exceeds Jurisdiction in Ongoing Lawsuit, Files for Judgment

Coinbase has taken a significant step in its ongoing legal battle with the US Securities and Exchange Commission (SEC) by filing for judgment. The crypto exchange alleges that the regulator is exceeding its authority by suing them. The SEC had filed a lawsuit against Coinbase in June, claiming that the exchange had violated federal securities laws by operating as an unregistered broker, exchange, and clearing agency for cryptocurrencies deemed as securities. The SEC cited 13 tokens as examples of such coins.

Coinbase contested the claims in its filing on Friday in response to the SEC’s allegations. The exchange asserted that the SEC’s lawsuit did not claim the existence of investment contracts in any of the mentioned examples.

Coinbase argued in the statement, “The transactions over Coinbase’s platform and Prime are not, and do not involve, contractual undertakings to deliver future value reflecting the income, profits, or assets of a business. They are commodity sales, with the obligations on both sides discharged entirely the moment the digital token is delivered in exchange for payment.”

In its defense, Coinbase referred to a recent ruling in the SEC’s case against Ripple, stating that the underlying facts were remarkably similar to those being alleged against them. The exchange also sought to dismiss SEC’s claims that its staking and wallet services violated securities laws, citing similar reasons.

Furthermore, Coinbase emphasized the Major Questions Doctrine, which it had raised in a previous filing. The exchange argued that if the SEC’s lawsuit were to proceed, it would substantially expand the regulator’s jurisdiction to encompass the entire cryptocurrency industry.

Coinbase supported its motion with ten different exhibits, including transcripts from a hearing in the SEC’s case against LBRY and orders from prior cases involving Howey Test questions.

The SEC has until October 3, 2023, to respond to Coinbase’s filing, while any amicus briefs supporting Coinbase can be submitted until August 11, 2023.

During an earnings call earlier in the week, Coinbase indicated its intention to file for the dismissal of the lawsuit. Chief Legal Officer Paul Grewal expressed confidence in winning the case. He emphasized that Coinbase’s primary objective, throughout both the litigation and engagement with the SEC and the US government, is to achieve regulatory clarity, safeguard consumers, promote innovation, and establish clear rules that all participants can comprehend and adhere to.

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