Coinbase slams SEC’s overreach in latest filing
- Crypto assets listed on Coinbase are not securities, the exchange claimed.
- Coinbase responded to the SEC’s lawsuit which the regulator filed against it earlier this month.
U.S. crypto exchange Coinbase has slammed the U.S. Securities and Exchange Commission’s (SEC) overreach. Coinbase has claimed that the crypto assets listed on its platform lie outside the jurisdiction of the regulator. Besides, all these assets listed on Coinbase are not investment contracts and therefore, not securities.
Coinbase made these claims in its answer filed in the U.S. District Court of Southern District of New York on 28 June. It was Coinbase’s response to the SEC’s lawsuit which the regulator filed against it earlier this month.
SEC previously alleged that a dozen of the cryptocurrencies sold through Coinbase’s wallet or trading platforms were unregistered securities. The regulating body made similar accusations when it sued Binance prior to Coinbase.
The latest response from Coinbase cements its previous arguments with additional details. Coinbase has claimed that crypto assets on the exchange’s secondary market platform are not part of any arrangements in which a promoter sells a contract-linked asset. Token issuers do not owe any obligations to investors. In short, Coinbase slammed the SEC, citing the Supreme Court’s Howey case as an example to support its claims.
Coinbase claimed that only the assets that the traders have bought and traded have value, not the businesses behind those assets. Thus, the transactions are not securities transactions.
Coinbase says SEC’s stance is inconsistent
According to the exchange’s filing, the current SEC Chair Gary Gensler changed his stance on the regulator’s authority over crypto assets between entering office in April 2021 and mid-2022. Besides, the company has also petitioned for crypto rulemaking. It also underlined that the Congress has started looking at the issue of crypto regulation.
The exchange’s filing argues that the regulator is pursuing enforcement by regulation rather than rulemaking.
Coinbase also wrote a letter to the judge overseeing the case, District Judge Katherine Polk Failla, on 28 June. It asked Judge Polk Failla to dismiss the SEC’s lawsuit. It alleged that when the SEC filed the lawsuit, it violated the exchange’s due process rights. Coinbase asked the judge to allow it to file for judgement and set a seven-week schedule for its motion, the SEC’s opposition, and its own response to the opposition.