The SEC’s Classification of Coinbase-Listed Cryptocurrencies as Securities: Coinbase’s Argument
Coinbase has made its final attempt to dismiss the lawsuit brought against it by arguing that the Securities and Exchange Commission (SEC) has overstepped its authority in classifying Coinbase-listed cryptocurrencies as securities. In a filing on October 24, Coinbase criticized the SEC for its broad definition of securities and claimed that the listed cryptocurrencies are outside the regulator’s jurisdiction. Coinbase further accused the SEC of attempting to oversee all investment activity, a power that only Congress possesses. Paul Grewal, Coinbase’s chief legal officer, supported these assertions, stating that the SEC’s definitions have no limiting function. This filing is in response to the SEC’s rebuttal on October 3, where the regulator urged the court to reject Coinbase’s motion for dismissal.
Coinbase vs. SEC: Background and Possible Outcome
The SEC filed a lawsuit against Coinbase on June 6, alleging that the exchange violated U.S. securities laws by listing tokens considered to be securities without registering with the regulator. On June 29, Coinbase submitted a motion for judgment, arguing that the SEC is overstepping its authority and infringing upon its due process rights. Judge Katherine Polk Failla may summon both parties for oral presentations in court and subsequently render a decision, dismiss the case, or opt for a jury trial.
Hot Take: The Battle Between Coinbase and the SEC Continues
Coinbase is making its final stand against the SEC’s classification of its listed cryptocurrencies as securities. The company argues that the SEC’s authority is limited to securities transactions and claims that the transactions at issue here do not qualify as investment contracts. By broadening its own authority, Coinbase accuses the SEC of attempting to oversee essentially all investment activity. However, the SEC maintains that these cryptocurrencies are investment contracts under the Howey test, falling within its jurisdiction. The outcome of this battle will have significant implications for the regulation of cryptocurrencies in the United States.
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