• Coinbase is seeking to have the US Securities and Exchange Commission’s (SEC) lawsuit against it dismissed.
• The SEC had accused Coinbase of running an unregistered securities exchange, broker, and clearing agency, labeling several of its listed assets as unregistered securities.
• In response, Coinbase argued that the regulator had approved its initial public offering in 2021 without ever mentioning that it had to register its business.
Coinbase Moves to Dismiss SEC Case
The rampage of crypto enforcement lawsuits from the United States Securities and Exchange Commission has taken a new turn in the case against Coinbase as the crypto exchange has revealed its intent to seek dismissal of the case. The SEC had accused the crypto exchange of running an unregistered securities exchange, broker, and clearing agency, labeling several of its listed assets as unregistered securities. The agency also asserted that a cross-section of Coinbase’s services, including its staking service, violated securities laws.
In new court documents dated Wednesday, June 28th., Coinbase issued its response to the SEC’s complaint and revealed its intent to file for dismissal. Coinbase argued that the regulator had approved its initial public offering in 2021 without ever mentioning that it had to register its business.
Questions Over Regulatory Authority
Coinbase supported these arguments by pointing out that SEC Chair Gary Gensler had testified around the same time that the agency lacked the statutory authority to regulate crypto exchanges, adding that Congress alone could fill the regulatory gap.
Contesting Asset Classification
The exchange notably also took issue with the SEC’s classification of listed assets as securities. Coinbase denied all claims made by the regulator regarding asset classifications and maintained there was no basis for such an assertion upon which a reasonable inference could be drawn from their activities or services offered since listing on their platform does not constitute an offering or sale of securities within any jurisdiction where they operate.
Motivation & Fairness Questioned
Coinbase attorneys called into question both motivation and fairness behind this lawsuit stating: “The SEC’s about-face is not a product of material changes to Coinbase’s business since 2021; none are alleged.“ They further added „Nowhere in its Complaint does the SEC suggest that Coinbase hid anything in many years of cooperative discussion.“
It remains unclear how this challenge will play out but one thing is certain – both parties are taking sides on what could potentially be precedent setting litigation when it comes to digital asset regulation in America.