Coinbase Global (NASDAQ:COIN) on Friday (August 4, 2023) reportedly requested a judge to end the US Securities and Exchange Commission’s (SEC) ongoing lawsuit that’s accusing the world’s biggest publicly-listed crypto exchange of violating applicable federal securities laws.
As mentioned in a filing in federal court in Manhattan, Coinbase has stated that the SEC had no authority/jurisdiction through which it could pursue its current lawsuit since the digital assets and related services sector it objected to does not actually qualify as securities, and said the regulator has overreached.
Coinbase Chief Legal Officer Paul Grewal noted via social media:
“Our core argument is simple – we do not offer ‘investment contracts’ as that term has been construed by decades of Supreme Court and other binding precedent.”
As reported by Reuters, a representative for the SEC declined to comment on the matter (beyond their publicly shared information/filings).
Coinbase had been sued by the SEC back in June of this year, and was accused of operating in an illegal or non-compliant manner as a securities exchange, broker and clearing agency without registering with the US SEC beforehand.
As covered recently, the SEC had reportedly requested Coinbase to halt trading in all virtual currencies with the exception of Bitcoin (BTC) prior to filing a lawsuit against the crypto exchange in June of this year, the Financial Times revealed on Monday (July 31, 2023). The FT has cited CEO Brian Armstrong as a source.
In statements shared with the FT, Armstrong reportedly said:
“We really didn’t have a choice at that point. Delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US. It kind of made it an easy choice … let’s go to court and find out what the court says.”
The SEC has alleged that Coinbase has been operating illegally or in a non-compliant manner since it reportedly failed to register as an exchange operator. But this may not necessarily be the case, given that many crypto firms in the US claim that the SEC does not actually review their submissions for registration.
The US regulator further claims that Coinbase traded around 13 different crypto tokens that may qualify as securities that should actually have been registered, including digital tokens Solana (SOL), Cardano (ADA), and Polygon (MATIC).
The SEC reportedly told the Financial Times that its enforcement unit didn’t make any official requests for firms to delist certain crypto-assets.
