• Coinbase has filed a 177-page response to the SEC’s lawsuit, claiming that some of the tokens mentioned in the complaint are not “investment contracts” and do not qualify as crypto asset securities.
• Coinbase argues that the SEC lacks existing regulatory power over digital assets and is acting outside its authority.
• The company also states that six out of 12 crypto assets mentioned in the lawsuit were trading on the platform when the SEC declared Coinbase’s registration statement effective in 2021, meaning they weren’t seen as securities then.
Coinbase Responds to SEC Lawsuit
U.S. crypto exchange giant Coinbase has filed a 177-page response to a lawsuit from the US Securities and Exchange Commission (SEC), stating that some tokens mentioned in the suit are not “investment contracts” and do not qualify as crypto asset securities. In June, the SEC sued Coinbase for operating as an unregistered broker, national securities exchange, and clearing agency. The lawsuit also mentioned Coinbase’s staking program along with 13 tokens including DASH, NEXO, FLOW, SOL, and ADA, labeling them as securities.
SEC Beyond Its Regulatory Authority?
Coinbase believes that by labeling these assets as securities, the SEC has been acting beyond its regulatory authority despite previous statements made by Chairman Gary Gensler to Congress in 2021 where he said only Congress could address regulatory gaps in this sector. By 2022 however Gensler reportedly claimed that the SEC had sufficient authority to regulate digital assets markets – something Coinbase disputes in their response filing.
Coinbase’s Position Unchanged Since 2021
The document further claims that Coinbase’s business remains unchanged since 2020 when it first requested to become publicly traded via direct public offering (DPO). Six out of 12 crypto assets labelled by the SEC were already trading on the platform when it was approved for DPO back in 2021 – suggesting they were not seen as crypto asset securities at this time either according to Coinbase’s lawyers.
In conclusion – while this legal battle will likely continue for many months or years still – it appears from both sides statements so far that this case revolves around whether or not certain digital assets should be classified under existing regulations or whether new legislation is needed before any enforceable action can be taken against companies like Coinbase operating within these markets.