April 19, 2024
Coinbase Challenges SEC's Authority in Lawsuit Dismissal Attempt
Latest Cryptocurrency News

Coinbase Challenges SEC’s Authority in Lawsuit Dismissal Attempt

Coinbase has strongly contested the classification of cryptocurrencies listed on its platform as securities by the United States Securities and Exchange Commission (SEC). In its final effort to have a lawsuit by the SEC dismissed, Coinbase argued that the SEC had exceeded its authority, asserting that its definition of securities was overly broad and did not apply to the cryptocurrencies in question.

According to Coinbase, the SEC’s jurisdiction is limited to securities transactions, specifically those involving “investment contracts.” The exchange emphasized that not all capital transactions with a profit motive fall under the SEC’s purview.

Coinbase accused the SEC of attempting a “radical expansion of its own authority,” claiming jurisdiction over nearly all investment activities, a power reserved for Congress under the major questions doctrine.

Coinbase’s Chief Legal Officer, Paul Grewal, echoed these concerns in an October 24 statement, stating that the SEC’s definitions lacked clear limitations.

This response from Coinbase follows the SEC’s October 3 rebuttal, in which the SEC urged the court to reject Coinbase’s motion to dismiss, maintaining that several cryptocurrencies listed by Coinbase qualified as investment contracts under the Howey test. The SEC had filed a lawsuit against Coinbase on June 6, alleging that the exchange had violated U.S. securities laws by listing tokens it considered securities without registering with the regulator.

On June 29, Coinbase filed a motion for judgment, contending that the SEC was abusing its authority and infringing upon Coinbase’s due process rights. The case is currently under the oversight of Judge Katherine Polk Failla, who may consider oral arguments from Coinbase and the SEC before making a judgment, dismissal, or the decision to proceed with a jury trial.

Image by jcomp on Freepik

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