The SEC Challenges Coinbase’s Jurisdiction Argument in Lawsuit
The U.S. Securities and Exchange Commission (SEC) has responded to Coinbase’s claim that the regulator lacks jurisdiction to bring a lawsuit against it. The SEC sued Coinbase last month, alleging that it was operating as an unregistered broker, clearinghouse, and exchange and listing unregistered securities. In its filing, the SEC stated that it would oppose any motion for judgment filed by Coinbase and asked the court to strike Coinbase’s arguments. The regulator argued that Coinbase had acknowledged the possibility of federal securities laws applying to its listings in the past. It also highlighted Coinbase’s adoption of the legal framework for determining whether cryptocurrencies met federal securities laws and its own acknowledgement that listed assets might be considered securities.
Key Points:
- The SEC challenges Coinbase’s claim of insufficient jurisdiction in its lawsuit.
- Coinbase had previously acknowledged the possibility of federal securities laws applying to its listings.
- The SEC argues that Coinbase adopted the legal framework for evaluating the legality of its conduct.
- The SEC opposes Coinbase’s arguments regarding the major questions doctrine and other concerns.
- A hearing is scheduled for July 13 in the District Court for the Southern District of New York.
SEC: Coinbase Acted Knowingly Despite Risks
The SEC’s filing emphasizes that Coinbase, as a multi-billion-dollar entity with legal counsel, could not claim ignorance of the risk of violating federal securities laws. The regulator states that Coinbase made a calculated decision to take on this risk in order to grow its business. The SEC also disputes Coinbase’s arguments regarding the investment contract requirements and the definition of asset sales. The regulator points to its recent legal victory against LBRY as an example supporting its position. The SEC maintains that it has the authority to enforce statutory requirements and that Coinbase’s major questions doctrine argument does not apply.
Hot Take:
The SEC’s response to Coinbase’s jurisdiction argument indicates that the regulator is determined to pursue its lawsuit against the cryptocurrency exchange. The SEC highlights Coinbase’s previous acknowledgement of the potential applicability of federal securities laws and argues that Coinbase knowingly took on the risk. This case will likely have significant implications for the regulation of cryptocurrency listings and the responsibilities of crypto exchanges. The outcome of the upcoming hearing on July 13 will provide further insights into the SEC’s stance and the potential impact on Coinbase and the broader cryptocurrency industry.
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