Coinbase Defies The SEC In Landmark Lawsuit Showdown
- The SEC will respond to Coinbase’s defense on July 13 after a recent court ruling.
- The exchange argues that the SEC lacks authority over the assets traded on its platform, as they are not securities.
- The pre-trial meeting has been moved to July 13, and Coinbase maintains that many of the coins mentioned in the lawsuit are outside the SEC’s jurisdiction.
According to a recent court ruling, the United States Securities and Exchange Commission (SEC) will respond to Coinbase’s first legal defense on July 13.
This timing is surprising since Coinbase used a “creative” defense strategy by delivering its initial answer 40 days before the August 7 deadline. The SEC was supposed to respond to the exchange’s argument by July 3, but owing to the July 4 holiday weekend, they asked for a three-day extension, which the court granted.
Coinbase said in a letter filed just before midnight on Wednesday in Manhattan federal court that the SEC lacks the power to pursue civil claims against it because the assets traded on its platform are not “investment contracts” and hence not securities.
“Coinbase has answered the SEC’s complaint with numerous defenses, including that this action violates due process and constitutes an abuse of discretion. But there is a more fundamental problem with the SEC’s case— one that the Chair recognized two years ago and that entitles Coinbase to judgment on the pleadings now: The subject matter falls outside the SEC’s authority,” the exchange’s counsel said in a letter to the court.
In addition, the pre-trial meeting has been renamed a pre-motion conference and has been shifted from August 24 to July 13 at 14:00 UTC. Coinbase has maintained in its response to the SEC’s complaint that many of the coins referenced in the lawsuit are outside of the Commission’s purview.
On June 6, the SEC filed a lawsuit against Coinbase, alleging that it gained billions of dollars as a middleman, including by trading at least 13 crypto assets, or tokens, such as Solana, Cardano, and Polygon, that should have been registered as securities. Coinbase was also sued for its “staking” scheme, in which it pools crypto assets to maintain activity on the blockchain network in return for “rewards” it gives to consumers after taking fees.
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