SEC Lawsuit Against Coinbase
• The SEC accused Coinbase of running an unregistered securities exchange, broker, and clearing agency, labeling several of its listed assets as unregistered securities.
• Coinbase responded by raising questions about the SEC’s authority and classification of digital assets.
• The crypto exchange has also revealed its intent to seek dismissal of the case.
Coinbase Challenges SEC Authority
Coinbase has issued a response to the SEC’s complaint, revealing its 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. Coinbase also 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 Denies Securities Classification
Contrary to the SEC’s complaint, Coinbase maintained that none of their listed assets or staking services constituted securities under US law. The crypto exchange further argued that these activities are not within the scope of regulation by any federal or state regulator due to their decentralized nature and lack of control by a single party.
SEC Moves To Dismiss Case
The SEC has now moved to dismiss their case against Coinbase with prejudice — meaning they will no longer be able to refile at a later date — citing “recent developments” as justification for their decision. These recent developments include changes in policy from financial regulators such as FinCEN which have made it easier for companies like Coinbase to operate on a larger scale without being subject to regulatory scrutiny by multiple separate agencies.
The legal battle between Coinbase and the US Securities and Exchange Commission appears headed toward an end with both parties moving towards dismissal of charges. This resolution is likely due in part to recent regulatory changes making it easier for companies like Coinbase to operate on a larger scale without being subject to unnecessary scrutiny from multiple separate agencies.