In a recent development, the US Securities and Exchange Commission (SEC) claimed that American crypto giant Coinbase may have knowingly violated securities laws. The securities regulator filed a lawsuit in Manhattan Federal Court, claiming that the Coinbase exchange was fully aware that crypto listings would fall under federal securities laws. Here are the details…
Coinbase dismissed the lawsuit.
In response to Coinbase’s request to dismiss the lawsuit, the SEC strongly opposed the arguments put forward by the crypto exchange. The regulator urged the court to ignore Coinbase’s claims regarding the legality of crypto listings, citing the exchange’s status as a multi-billion dollar organization with access to sophisticated legal counsel. The SEC also contested the argument that Coinbase’s initial public offering (IPO) approval serves as confirmation of its core business and protects it from future enforcement actions.
Highlighting Coinbase’s own court filings, the SEC noted that the exchange acknowledges the uncertainty surrounding the security status of the tokens listed on its platform. This admission implies that Coinbase understands the potential applicability of securities laws to its operations, but has deliberately chosen to assume the associated risks in seeking business growth.
The SEC also claimed that Coinbase’s arguments were flawed. The regulator stressed that when making its listing decisions, Coinbase has adopted the legal framework that it currently claims is unenforceable. In light of these factors, the SEC asked the court to dismiss Coinbase’s request to dismiss the case. In addition, the regulator has declared its intention to oppose any decision requests from the crypto exchange.
13 altcoins in particular caused problems
The SEC previously claimed that Coinbase has made it clear on its website that when evaluating whether a particular asset should be listed, it is based on the Howey test, a standard used to determine whether an asset qualifies as a security. The SEC filed a lawsuit claiming that nine cryptocurrencies, including SOL, ADA, MATIC, FIL, NEAR, VGX, DASH, SAND, ICP, NEXO, AXS, CHZ, and FLOW, are investment contracts and are offered for sale on Coinbase without proper registration.
The case is now in the hands of US District Judge Katherine Polk Failla, who will carefully consider the arguments presented by both sides. A ruling on Coinbase’s request to dismiss the lawsuit is expected in the coming days, providing important insights into the future course of this high-profile legal battle. As the litigation progresses, the outcome of this lawsuit will have significant implications for the crypto industry in general. Market participants will closely monitor the decision as it has the potential to shape regulatory policies surrounding crypto exchanges and their compliance with securities laws.
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