The United States Securities and Exchange Commission (SEC) has responded to Coinbase’s claims that it lacks jurisdiction to prosecute the crypto exchange.
In a letter addressed to a district judge on July 7, the SEC stated that Coinbase was well aware of the possibility that federal securities laws could apply to its operations.
The regulator highlighted that Coinbase had openly informed its shareholders about the potential classification of assets traded on its platform as securities.
The SEC’s response emphasized that Coinbase, being a “multi-billion-dollar entity advised by sophisticated legal counsel,” was deliberately disregarding decades of established law, particularly the Howey test.
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This behavior, according to the SEC, indicated Coinbase’s attempt to create its own standard for determining what constitutes an investment contract.
The SEC’s letter was in direct response to a previous filing made by Coinbase on June 28.
In that filing, Coinbase informed the court of its intention to submit a motion for judgment, which is typically used when a party believes there are no significant factual disputes in a case, as explained by Cornell University.
Coinbase had referred to statements made by SEC Chair Gary Gensler during his appearance before Congress, where he supposedly claimed that crypto exchanges were not under the purview of a market regulator and that only Congress had the authority to regulate them.
Coinbase also highlighted that the SEC had filed charges against the company two years after its public listing, despite having been provided with exhaustive descriptions of its activities.
Roland Chase, a corporate and securities lawyer, shed light on the SEC’s authority.
He explained that the SEC’s role, as authorized by Congress, is to review a company’s going public documents and provide comments to enhance disclosure to potential investors.
Chase emphasized that the SEC does not have the power to deny a company’s public listing simply because it disagrees with the investment prospects.
The SEC had previously charged Coinbase on June 6 for allegedly offering unregistered securities since 2019. A pre-motion conference for the case is scheduled for July 13 at 2:00 pm UTC.
