The SEC Urges Judge to Reject Coinbase’s Bid to Dismiss Lawsuit
The U.S. Securities and Exchange Commission (SEC) is urging a federal judge to reject crypto exchange Coinbase’s attempt to dismiss the lawsuit against it. The SEC argues that there are “fatal flaws” in Coinbase’s legal arguments related to alleged securities law violations. The regulator also refutes Coinbase’s claim that the SEC blessed its conduct when it went public and lacks authority over crypto asset transactions. The SEC maintains that the major questions doctrine, which suggests that major matters are not delegated to executive agencies, does not apply in this case.
The Battle Over the Howey Test
A key issue in the legal battle between Coinbase and the SEC is the interpretation of the Howey test, a precedent in securities law. Coinbase argues that crypto trades on its platform do not qualify as investment contracts because there is no formal contract involved. However, the SEC advocates for a broader interpretation of the Howey test, believing it should encompass various securities, including certain crypto assets. The SEC states that a formal contract is not a prerequisite for determining whether a crypto asset is a security under the Howey test.
Coinbase’s Response and Request for Dismissal
Paul Grewal, Coinbase’s Chief Legal Officer, responded on social media by stating that the SEC’s arguments were nothing new and reiterated that the assets listed on their platform are not securities within the SEC’s jurisdiction. Grewal compared the SEC’s stance to claiming that items like Pokemon cards and stamps are also securities. Coinbase had previously asked the judge to dismiss the case, citing Ripple’s partial victory against the SEC as supporting evidence. Grewal announced that Coinbase would file its reply by October 24.
Hot Take: The Ongoing Battle Between Coinbase and the SEC
The legal battle between Coinbase and the SEC continues to escalate, with both sides presenting their arguments before a federal judge. Coinbase maintains that the assets traded on its platform are not securities, while the SEC argues for a broader interpretation of securities law that includes certain crypto assets. The outcome of this case could have significant implications for the regulation of cryptocurrencies in the United States. As the crypto industry seeks clarity and regulatory certainty, it remains to be seen how this legal dispute will unfold and what impact it will have on the wider market.
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