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Coinbase Global has requested a judge to dismiss the U.S. Securities and Exchange Commission’s (SEC) lawsuit, which accuses the world’s largest publicly traded cryptocurrency exchange of violating federal securities laws.
In a filing with the federal court in Manhattan, Coinbase argued that the SEC lacks the authority to pursue the lawsuit because the digital assets and services in question do not qualify as securities. The company’s Chief Legal Officer, Paul Grewal, stated that they do not offer “investment contracts” as defined by established legal precedent.
The SEC filed the lawsuit against Coinbase in June, alleging that the exchange operated illegally as a national securities exchange, broker, and clearing agency without registering with the regulator.
Friction between the cryptocurrency sector and the top U.S. markets regulator has been growing, with the SEC filing a series of lawsuits against major crypto platforms. The SEC insists that these platforms should register and adhere to regulations similar to those governing stocks or bonds, while the crypto industry argues that new legislation is required. The outcome of the litigation between the SEC and Coinbase is being closely watched, with some observers considering it an “existential” clash.
Coinbase referred to a recent case involving Ripple Labs in its Friday (August 4, 2023) filing, pointing out that the SEC’s lawsuit hinges on the type of transactions that a judge deemed outside the regulator’s jurisdiction.
Shares of Coinbase fell 3.8% on Friday.
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