The SEC Opposes Coinbase’s Motion for Judgment on the Pleadings
The U.S. Securities and Exchange Commission (SEC) has filed a legal memorandum opposing Coinbase’s Motion for Judgment on the Pleadings. The SEC argues that crypto assets traded on Coinbase meet the criteria of an “investment contract” according to the Howey test. They state that investors expect profits primarily from the efforts of others and that each crypto asset issuer on Coinbase’s platform has invited investors to expect an increase in value.
Coinbase’s Claim Rejected by the SEC
The SEC refutes Coinbase’s claim that transactions on its platform never involve investment contracts as defined by common law. They emphasize that the existence or absence of contractual undertakings is just one factor considered in determining whether an investment contract exists. The SEC also rejects Coinbase’s attempt to shift blame onto them, stating that Coinbase has been aware since 2016 of the potential classification of crypto assets as securities under the Howey test.
Coinbase Counters SEC Claims
Coinbase’s Chief Legal Officer, Paul Grewal, responded to the SEC’s claims on social media. Grewal criticized the SEC for making broad legal claims without sufficient legal citations and argued that the assets listed on Coinbase are not securities and therefore not under the SEC’s jurisdiction. He mentioned recent court decisions that have clarified this distinction. Grewal also highlighted the “Stand With Crypto” initiative in Washington, D.C., where founders from over 40 crypto companies advocate for consumer-friendly legislation.
Hot Take: SEC and Coinbase Continue Legal Battle Over Crypto Assets
The legal battle between the SEC and Coinbase continues as the SEC opposes Coinbase’s Motion for Judgment on the Pleadings. The SEC argues that crypto assets traded on Coinbase meet the criteria of an investment contract, while Coinbase maintains that these assets are not securities and are outside the SEC’s jurisdiction. This case raises important questions about the regulatory framework for crypto assets and the role of the SEC in overseeing their trading. As the crypto community awaits the court’s decision, it remains to be seen how this legal battle will shape the future of crypto regulation in the United States.
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