• The SEC filed a lawsuit against Coinbase earlier this month for operating an unregistered securities exchange and broker.
• Coinbase has responded to the SEC’s complaint by filing for dismissal, arguing that the SEC had approved its initial public offering in 2021 without ever mentioning that it had to register its business.
• Coinbase also argued that the SEC lacked the statutory authority to regulate crypto exchanges and questioned the classification of listed assets as securities.
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. The SEC also asserted that a cross-section of Coinbase’s services, including its staking service, violated securities laws.
Coinbase Files Motion to Dismiss Case
In response to the SEC’s complaint, Coinbase issued court documents dated Wednesday, June 28 revealing their intent to file for dismissal. The crypto exchange argued that the regulator had approved its initial public offering in 2021 without ever mentioning that it had to register its business. Furthermore, they pointed out that SEC Chair Gary Gensler had testified around the same time that the agency lacked the statutory authority to regulate crypto exchanges, adding that Congress alone could fill the regulatory gap.
Coinbase Challenges Classification of Assets as Securities
Coinbase denied that its listed assets or staking services were classified as securities by challenging this assertion from within their response document. They further called into question the motivation and fairness of this lawsuit when pointing out there was no new information or legislative changes since their IPO approval two years ago.
SEC Arguments on Unlawful Practices
The SEC’s allegations focused on CoinBase engaging in unlawful practices due to not registering with them as a security exchange or broker but rather going through with an IPO which was approved by them without any mention of registration being necessary. This has caused concern among investors who have put their faith in CoinBase’s trading platform believing it is regulated when it is not according to US law enforcement agencies‘ opinion on cryptocurrencies being classified as assets/securities requiring registration with them if traded thus making CoinBases actions illegal according to them .
There is still much uncertainty surrounding this case between Coinbase and the US Securities and Exchange Commission given how both parties have different opinions on what cryptocurrency should be classified under US law – whether it’s considered a security or commodity asset – which could mean significant implications for future cases involving similar companies operating within US borders without proper regulatory oversight . For now , we will have wait until more information comes forward regarding what resolution is reached between both parties .