Coinbase is attempting to have the SEC's action against company dropped, but the regulator has requested a judge to reject that request. In asserting that the digital assets supplied on the trading platform were unregistered securities, the agency, according to the exchange, overstepped its bounds and misused its judgment.
SEC Expands Arguments in Favor of Suggestion That Crypto Assets on Coinbase Are Securities
The nation's securities watchdog is still pursuing legal action against the country's top bitcoin exchange. The SEC requested a federal judge to reject Coinbase's requests to have the Commission's action against company dismissed on Tuesday.
The SEC claimed in a lawsuit it filed in early June that Coinbase had operated an unregistered exchange, brokerage, and clearing agency illegally for years in order to circumvent its rules and violate multiple securities laws. The regulatory agency had previously brought a similar complaint against Binance, the largest cryptocurrency exchange in the world.
Asserting that the SEC had "overstepped its statutory authority," "abused its discretion," and abandoned its own prior interpretations of the U.S. securities laws, Coinbase petitioned the court to dismiss the SEC action in August.
The government expanded on its justifications in a filing on October 3 that Bloomberg cited. It stated that public remarks made by issuers, "many of which were rebroadcast by Coinbase—led investors, including those on Coinbase's platform, to reasonably expect profits from the issuers' efforts." Additionally, it referred to Coinbase's argument that sales of cryptocurrency on secondary market platforms are not investment contracts as "unsupported and nonsensical".
Paul Grewal, chief legal officer at Coinbase, reacted to the SEC's most recent claims by saying, "It's more of the same old." He said the company would respond later in October, reinforcing the exchange's position that it is not offering securities and once more requesting new crypto-specific regulations from the SEC in a post on X, formerly Twitter.
Many people in the business and outside of it anticipate that the case will make clear if the SEC has any authority over crypto assets. The Commission has maintained that trading platforms must register with it and that the majority of digital tokens are subject to its regulations under its current Chair, Gary Gensler. Other cases of public interest include the one involving Ripple, which just recently won a legal argument against the SEC.
Do you believe the court will accept the SEC's new defenses in its fight to keep the lawsuit from being dismissed? In the comments area below, please share your opinions on the case.