• The SEC has filed a lawsuit against Coinbase for reportedly running an unregistered securities exchange, broker, and clearing agency.
• Coinbase has responded to the SEC’s complaint by seeking dismissal and questioning the regulator’s authority and classification of digital assets.
• SEC Chair Gary Gensler recently testified that the agency lacks the statutory authority to regulate crypto exchanges, illustrating Coinbase’s point.
SEC Files Lawsuit Against Coinbase
The United States Securities and Exchange Commission (SEC) set the stage for a legal battle with Coinbase earlier this month. The agency accused the crypto exchange of running an unregistered securities exchange, broker, and clearing agency, labeling several of its listed assets as unregistered securities. Moreover, the SEC asserted that a cross-section of Coinbase’s services, including its staking service, violated securities laws.
Coinbase Moves to Dismiss Case
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. In their response arguments, Coinbase questioned the motivation and fairness of the lawsuit on grounds that the agency had approved their initial public offering in 2021 without ever mentioning they had to register their business first. Additionally, they pointed out that SEC Chair Gary Gensler had recently testified that the agency lacked statutory authority to regulate crypto exchanges because it is only Congress who can fill this regulation gap.
Coinbase Denies Assets Are Securities
Contrary to what was stated in thhe SEC’s complaint regarding listing assets being classified as securities; Coinbase maintained that these digital assets are not securities according to U.S law. Therefore denyinf any wrongdoing when it comes violations of security laws . They also argued that if these digital assets are indeed classified as seucrities under federal law then this would be “neither prudent nor lawful.“
SEC Defends Authority Over Crypto Exchanges
In a statement responding to Coinbases claims about lack of statutory authority over cryptocurrency exchanges ,the SCE reiterated in a statement on Thursday stating “Regardless of whether or not cryptocurrencies are deemed ‘securities’ under federal law…it is well established under Supreme Court precedent that our anti-fraud jurisdiction extends beyond registered markets.“ Furthermore asserting their right over regulating cryptocurrency exchnages regardless wether or not they fall within „security“ definition .
It remains unclear how this case will play out but one thing is certain: both parties have strong positions backed up by valid points which will most likely lead into lengthy legal battle between them .