Sunday, June 16, 2024

Coinbase Seeks Dismissal of SEC Case Targeting Crypto Exchange

Coinbase Takes Legal Action to Dismiss SEC Lawsuit over Alleged Unregistered Securities Sales

Coinbase, the leading US-based cryptocurrency exchange, has initiated legal proceedings by filing a motion to dismiss the lawsuit brought against it by the US Securities and Exchange Commission (SEC). The SEC’s allegations state that Coinbase violated regulations by offering and selling unregistered securities, specifically naming cryptocurrencies like Cardano (ADA), Solana (SOL), and Polygon (MATIC).

In response, Coinbase has presented its case to the Southern District of New York, arguing that the SEC lacks jurisdiction in this matter. The exchange asserts that its transactions should not be classified as securities. According to Coinbase, for an economic arrangement to be considered an investment contract, it must involve an ongoing business enterprise with enforceable obligations owed to investors. As Coinbase’s secondary market exchange transactions do not carry such obligations, the exchange maintains that they should not be deemed securities transactions.

The exchange also contends that SEC Chair Gary Gensler has exceeded his authority by imposing requirements on crypto companies to register as securities exchanges and attempting to retroactively penalize them for non-compliance. Coinbase highlights that prior to the SEC’s recent regulatory actions, no court had interpreted “investment contract” to apply to stand-alone asset sales or arrangements without an obligation for the seller to operate a business in the buyer’s interest. The exchange points out the inconsistency of Chair Gensler’s statements, as he previously disclaimed such powers two years ago. Coinbase believes that the SEC’s assertions of authority and its pursuit of punitive retroactive penalties demonstrate regulatory overreach.

It is worth noting that the SEC has also initiated a similar lawsuit against Binance, the world’s largest cryptocurrency exchange platform in terms of trading volume. Both cases revolve around allegations of selling unregistered securities.

Read Also: KuCoin Enforces Mandatory KYC for All Customers, Embracing Regulation

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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