Coinbase Global has requested a judge to dismiss the lawsuit filed by the US Securities and Exchange Commission (SEC) against them. The largest publicly traded cryptocurrency exchange argues that the SEC lacks the authority to pursue the case, as the digital assets and services in question do not meet the definition of securities. Coinbase’s Chief Legal Officer, Paul Grewal, stated in a post on X, formerly Twitter, that they do not offer “investment contracts” according to established legal precedent.
The SEC sued Coinbase in June, accusing the company of operating as an unregistered national securities exchange, broker, and clearing agency. This legal battle reflects the growing tension between the crypto sector and the top US markets regulator, with the SEC insisting on registration and regulation similar to traditional financial markets, while the crypto industry seeks new legislation specific to their industry. Many industry players are closely observing the outcome of this clash, considering it to be a significant test for the future of cryptocurrencies.
In recent cases involving crypto firms Ripple Labs and Terraform, federal judges in Manhattan reached different conclusions regarding the SEC’s jurisdiction and authority. Coinbase references the Ripple case in its filing, highlighting the judge’s ruling that the SEC exceeded its jurisdiction in certain transactions.
Coinbase’s stock price dropped 3.8% following the news.
© Thomson Reuters 2023
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