Coinbase, the largest cryptocurrency platform in the United States, has announced its intention to request the dismissal of a lawsuit filed against it by the U.S. Securities and Exchange Commission (SEC).
The lawsuit alleges that Coinbase violated the law by failing to register its business.
In a letter submitted to the Manhattan federal court just before midnight on Wednesday, Coinbase argued that the SEC lacks the authority to pursue civil claims because the assets traded on its platform do not fall under the category of “investment contracts” and, therefore, should not be considered securities.
According to Coinbase, the SEC can only pursue its claims if the tokens and staking services in question are classified as securities, which the company asserts they are not.
As of now, there has been no immediate response from the SEC regarding Coinbase’s argument.
The SEC initiated the lawsuit against Coinbase on June 6, accusing the platform of making billions of dollars by acting as a middleman in the trading of at least 13 crypto assets or tokens, such as Solana, Cardano, and Polygon, that should have been registered as securities.
Apart from the alleged securities violations, Coinbase also faces legal action over its “staking” program.
This program involves pooling crypto assets to support blockchain network activity, with customers receiving rewards in exchange for their participation while Coinbase takes commissions.
The SEC’s legal action against Coinbase came shortly after its lawsuit against Binance, the world’s largest cryptocurrency exchange.
The SEC accused Binance of inflating trading volumes, mishandling customer funds, and providing false information about its operations.
SEC Chair Gary Gensler has been actively asserting jurisdiction over the cryptocurrency industry, claiming that it has undermined investor trust in U.S. capital markets.
In a separate filing disputing the SEC’s claims, Coinbase stated that it welcomes regulation but believes the regulator is overstepping its boundaries and attempting to fill a “regulatory gap” without the necessary authorization from Congress.
Coinbase argued that the SEC’s actions in this case exceed its authority and are therefore unlawful.
Following the news of Coinbase’s response, shares of its parent company, Coinbase Global, experienced a 2.2% increase, rising by $1.58 to reach $72.33 during afternoon trading on the Nasdaq.
The lawsuit against Coinbase is officially known as SEC v Coinbase Inc et al, and it is being heard in the U.S. District Court for the Southern District of New York under case number 23-04738.
Other Stories:
Crypto ATM Company To Go Public After Announcing Merger
Crypto Scams and Hacks Resulted In Almost $700 Million Loss In First Half of 2023
