Coinbase Challenges SEC Lawsuit
Cryptocurrency exchange Coinbase has submitted its final arguments in an attempt to dismiss the lawsuit filed by the US Securities and Exchange Commission (SEC). The SEC sued Coinbase in June, alleging that it acted as an unregistered broker and exchange. In its arguments, Coinbase challenged the SEC’s definition of a security, stating that it is too broad and does not apply to the cryptocurrencies it lists. The exchange argued that the SEC is attempting a “radical expansion of its own authority” by trying to control all investment activity. Coinbase CEO Brian Armstrong has previously stated that delisting assets other than Bitcoin, as requested by the SEC, would have meant the end of the crypto industry in the US.
Coinbase: SEC’s Definition of a Security is Too Wide
In its attempt to dismiss the lawsuit filed by the SEC, Coinbase argued that the agency’s definition of what constitutes a security is far too broad. The exchange stated that not every capital transaction qualifies as a security, and trades over Coinbase are only considered securities transactions if they involve investment contracts. Coinbase further claimed that an investment contract exists only if someone expects their purchase to increase in value. The exchange believes that accepting the SEC’s position would lead to a radical expansion of its authority without any grounding in precedent.
“Radical Expansion of its Own Authority”
Coinbase accused the SEC of acting beyond its scope and attempting a radical expansion of its own authority. The exchange argued that only Congress has the authority to extend jurisdiction over essentially all investment activity, which the SEC is trying to do. Coinbase Chief Legal Officer Paul Grewal supported these claims, stating that the SEC’s definition of securities has no limiting function at all. Grewal emphasized that such an expansion of authority would have significant implications for countless software-driven services, extending the SEC’s reach without precedent.
The SEC and Coinbase’s Never-Ending Battle
Regulatory disagreement between the SEC and Coinbase has been ongoing for some time. After the SEC filed the lawsuit in June, Coinbase sought to dismiss all cases initiated by the agency. The exchange argued that transactions over its platform and Prime are not contractual undertakings related to future value or assets of a business, but rather commodity sales. The SEC later requested that Coinbase delist all assets except Bitcoin, which the exchange declined to do. Coinbase CEO Brian Armstrong explained that complying with the request would have effectively ended the crypto industry in the US, leading to the decision to go to court instead.
Hot Take: Coinbase Challenges SEC’s Authority in Lawsuit
Coinbase is making its final attempt to dismiss the lawsuit filed by the US Securities and Exchange Commission (SEC) by challenging the agency’s definition of a security as too broad. The exchange argues that not all capital transactions qualify as securities and that trades over Coinbase are only considered securities transactions if they involve investment contracts. Coinbase accuses the SEC of attempting a “radical expansion of its own authority” beyond its scope. This ongoing battle between Coinbase and the SEC highlights regulatory disagreements in the cryptocurrency industry. Coinbase’s refusal to comply with the SEC’s request to delist assets other than Bitcoin demonstrates its commitment to fighting for the crypto industry’s survival in the US.
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