Coinbase challenges the SEC's crypto authority in a final attempt to dismiss the regulators lawsuits
October 25, 2023 8:48 AM
According to Coinbase, the SEC's definition of an investment contract is inconsistent with US securities regulations.
In its final attempt to have a lawsuit filed against it by the United States Securities and Exchange Commission dismissed, Coinbase contended that the SEC acted beyond its authority by classifying cryptocurrencies listed on the exchange as securities.
Coinbase criticized the SEC in a court document made on October 24th, arguing that the SEC's definition of a security is too broad and that the cryptocurrencies it listed are not subject to the regulator's jurisdiction.
"The Securities and Exchange Commission may only regulate dealings in securities. However, not all monetary exchanges conducted through Coinbase qualify as securities transactions because they do not entail "investment contracts." The deals at hand in this case do not."
In its lawsuit against the SEC, Coinbase argued that the agency had engaged in a "radical expansion of its own authority" by asserting its authority "over essentially all investment activity," a power reserved exclusively to Congress under the big questions doctrine.
Coinbase's chief legal officer, Paul Grewal, reiterated these sentiments in an X post he published on October 24. Grewal wrote that the SEC's criteria serve "no limiting function at all."
The most recent filing from Coinbase is in response to the SEC's response from October 3. In that response, the SEC said that the cryptocurrencies that Coinbase listed were investment contracts under the Howey test and asked the court to reject Coinbase's petition to dismiss the case.
On June 6th, the SEC filed a lawsuit against Coinbase, claiming the exchange broke U.S. securities laws by not registering with the regulator before listing many tokens the SEC considers securities.
On June 29th, Coinbase filed a motion for judgment, claiming the SEC had violated its due process rights and abused its authority.
The case's presiding judge, Katherine Polk Failla, might call both Coinbase and the SEC to the stand for oral arguments before rendering a verdict, dismissing the case, or requesting a jury trial.