Coinbase Global recently filed a motion in federal court in Manhattan, requesting the dismissal of the lawsuit filed by the US Securities and Exchange Commission (SEC) against the cryptocurrency exchange. Coinbase argued that the SEC lacks the authority to pursue the lawsuit as the digital assets and services in question do not meet the definition of securities. According to Coinbase Chief Legal Officer Paul Grewal, the company does not offer investment contracts and therefore does not fall under the jurisdiction of the SEC, as determined by legal precedents.
The SEC declined to comment on Coinbase’s filing.
The SEC initially sued Coinbase in June, alleging that the exchange was operating illegally as a national securities exchange, broker, and clearing agency without proper registration.
Tensions between the crypto sector and the top US markets regulator have been escalating, with the SEC filing numerous lawsuits against major cryptocurrency platforms. The SEC argues that these platforms should adhere to regulations similar to those applicable to traditional stock or bond exchanges. However, the crypto sector contends that new legislation is necessary. Many industry stakeholders are closely monitoring the legal battle between Coinbase and the SEC, viewing it as a critical clash.
In recent months, there has been a divergence in federal court rulings on SEC lawsuits against crypto firms Ripple Labs and Terraform, regarding the regulator’s authority to regulate the sector. Coinbase referenced the Ripple case in its filing, highlighting the judge’s decision that the SEC had overstepped its jurisdiction.
Following Coinbase’s filing, the company’s shares experienced a 3.8 percent decline.
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Deepak Sen is a tech enthusiast who covers the latest technological innovations, from AI to consumer gadgets. His articles provide readers with a glimpse into the ever-evolving world of technology.