Cryptocurrency exchange Coinbase, headquartered in the U.S., has submitted a motion to dismiss a lawsuit initiated by the Securities and Exchange Commission (SEC).
The SEC brought the lawsuit against Coinbase in June, approximately three months after the company received a Wells notice from the regulatory body.
In a legal document filed on August 4 with the U.S. District Court for the Southern District of New York, Coinbase’s attorneys argue that the SEC has overstepped its authority, abused its discretion, and misinterpreted securities laws in exercising certain regulatory oversight over the exchange.
They referenced the SEC v. Ripple case, pointing out that a judge had determined that XRP did not predominantly meet the definition of a security as per the commission’s existing standards.
In the lawsuit, the SEC has alleged that 12 tokens in question meet the criteria of “investment contracts” under the Howey test and therefore Coinbase has been operating as an unregistered broker.
Coinbase disputes this assertion, maintaining that the SEC’s challenges regarding its staking program lack legal standing.
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The firm requested the court to dismiss the case, alleging that the SEC’s action was “punitive” and overstepped the regulatory powers given to it by Congress.
Coinbase announced its decision to file the motion to dismiss during an earnings call on August 3. The company continues to refute the SEC’s accusations that it could have violated securities laws through its activities.
Coinbase is not alone in facing SEC scrutiny. The regulator is also pursuing enforcement actions against Binance and Hex founder Richard Heart.
Recently, U.S. legislators have pushed legislation through committees that might reform the SEC’s authority over digital assets, should it become law.
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