Coinbase filed a motion to dismiss the SEC lawsuit in its entirety, seeking clarity in crypto regulation.
Coinbase Makes a Major Move in SEC Lawsuit
On Friday, July 4, Coinbase filed a new motion seeking to dismiss the lawsuit started by the U.S. Securities and Exchange Commission (SEC) entirely, after hinting at the major move in yesterday’s Shareholder letter on the platform’s Q2 earnings.
In the filing, Coinbase claims that the regular is exceeding its authority by suing the cryptocurrency exchange because the platform does not offer “investment contracts”.
“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,” the filing stated.
The crypto exchange also referred to the recent ruling partially in favor of Ripple in a similar case against the SEC, saying that the core facts were “substantially identical to those alleged here.” However, there’s no guarantee that the court will consider this argument, because another crypto company Terraform Labs also recently tried to cite the Ripple’s case but was rejected by Judge Rakoff.
Ongoing Legal Battle Against SEC
As it was recently revealed, before suing the exchange, the SEC first asked Coinbase to halt all crypto trading except that of Bitcoin, arguing that all other digital assets are viewed as securities. Coinbase decided to decline the SEC’s request. The company’s CEO Brian Armostrong explained why:
“We really didn’t [did not] have a choice at that point; delisting every asset other than Bitcoin, which by the way, is not what the law says, would have essentially meant the end of the crypto industry in the US. It kind of made it an easy choice… let’s [let us] go to court and find out what the court says.”
In June, the regulator filed suit against Coinbase alleging the platform failed to register as a broker, clearing agency, or national securities exchange and traded at least 13 cryptocurrencies that could be considered securities.
Seeking Regulatory Clarity
Coinbase has repeatedly asked for more clarity regarding crypto regulation from the SEC but still hasn’t responded. The regulator requested four more months to provide a response to the platform’s call.
In its latest Shareholder letter, Coinbase highlighted:
“…despite our good faith efforts and transparency of our business to the SEC for years now, we were deeply disappointed that the SEC brought an unwarranted enforcement against us in June, and that ten states initiated proceedings about our staking services. We are confident in the work we have done to abide by all federal and state securities laws, and as we vigorously defend that work, we plan to use these proceedings as an opportunity to bring more clarity to our industry as a whole.”
Coinbase Chief Legal Officer Paul Grewal expressed optimism regarding the case:
“With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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