Coinbase Argues SEC Overstepped Authority in Lawsuit
Coinbase has made its final bid to dismiss a lawsuit by the United States Securities and Exchange Commission (SEC), arguing that the SEC overstepped its authority when it classified Coinbase-listed cryptocurrencies as securities. In a recent filing, Coinbase criticized the SEC for having a wide definition of what qualifies as a security and claimed that the cryptocurrencies listed on the exchange are not under the regulator’s jurisdiction.
Challenging the SEC’s Definition
Coinbase stated that the SEC’s authority is limited to securities transactions and that not every capital investment qualifies as a security. The exchange argued that trades on Coinbase are only considered securities transactions if they involve “investment contracts,” which Coinbase claims is not the case for the transactions in question. According to Coinbase, the SEC has expanded its own authority beyond its limits.
Claims of Radical Expansion
Coinbase accused the SEC of attempting a “radical expansion of its own authority” and claimed that such expansion can only be done by Congress under the major questions doctrine. Coinbase’s chief legal officer, Paul Grewal, supported these claims in an online post, stating that the SEC’s definitions have no limiting function at all.
SEC’s Rebuttal and Lawsuit Background
The SEC had previously rebutted Coinbase’s dismissal motion, asserting that various cryptocurrencies listed on Coinbase were investment contracts under the Howey test. The SEC sued Coinbase on June 6, alleging that the exchange violated U.S. securities laws by listing tokens without registering with the regulator. In response, Coinbase filed a motion for judgment, arguing that the SEC was abusing its power and violating its due process rights.
Judge’s Decision
Judge Katherine Polk Failla, who is overseeing the case, may call Coinbase and the SEC to appear in court for oral arguments before issuing a judgment. The judge has the authority to dismiss the case, move it to be heard in front of a jury, or rule in favor of either party.
Hot Take: Coinbase Challenges SEC’s Authority
Coinbase’s final bid to dismiss the SEC’s lawsuit demonstrates its determination to challenge the regulator’s authority. By arguing that the SEC has overstepped its bounds and expanded its jurisdiction beyond securities transactions, Coinbase aims to protect its position as a cryptocurrency exchange. This legal battle between Coinbase and the SEC will likely have significant implications for the regulatory landscape surrounding cryptocurrencies in the United States. As both parties await a decision from Judge Katherine Polk Failla, the outcome could shape future regulations and oversight in the crypto industry.
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