The crypto firm has filed a motion to dismiss the legal case brought against it by the US Securities and Exchange Commission (SEC), citing a lack of jurisdiction and violation of due process.
Coinbase’s Rebuttal To SEC
The industry is closely following the legal battle between US-based crypto exchange Coinbase and the SEC. In the latest development in the matter, the crypto firm has claimed that the regulatory body has no jurisdiction over Coinbase’s offerings. The company has even filed a motion with the US court to dismiss the SEC’s complaints on the grounds that the digital assets listed in the Coinbase platform are not considered securities and therefore are not under the SEC’s purview. This motion is in direct opposition to the SEC’s claim that several cryptocurrencies offered on the exchange’s wallets or trading platforms are unregistered securities.
“Cryptos Are Not Investment Contracts”
The SEC had taken its allegations against Coinbase to legal court in early June by filing a lawsuit against the crypto exchange. On June 29, the latter countered back via a 277-page response that declared that these cryptocurrencies do not qualify as investment contracts. This means that these cryptos are not an asset tied to a contract that a promoter could sell for a profit, and the token issuers are not obligated to the investors. Since the profit or loss generated from these crypto transactions depended entirely on the assets themselves and not the company that issued them, Coinbase claimed that they cannot be considered securities. The company mentioned the Supreme Court ruling of the Howey case to support its position.
The Coinbase filing states,
“None of the assets the SEC has now identified are, in fact, securities, and for that and other reasons, secondary transactions in those assets are also not securities. […] None of these satisfy Howey’s definition of an “investment contract.” In arguing otherwise, the SEC has advanced a novel construction of the operative term that is divorced from […] statutory context the Supreme Court and the Commission itself long ago agreed must inform the term’s meaning.”
Coinbase Claims Abuse Of Process
Notably, the company’s rebuttal has also pointed fingers at SEC Chair Gary Gensler and his fluctuating stance on the regulating body’s jurisdiction. Coinbase also pointed out its repeated requests for clarity on regulation and its voluntary compliance with the rules of various overlapping regulators, including the SEC, its senior staff members, and the courts regarding the application of securities laws to the crypto industry.
Finally, the motion claims that the case must be dismissed solely on the grounds of violation of Coinbase’s rights to due process and alleged abuse of process.
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