A federal judge in Manhattan on Wednesday said the U.S. securities regulator’s lawsuit against Coinbase can move forward Open new tab. Thus, Coinbase had to face the lawsuit from the US securities regulator. However, the institution denied a claim about Coinbase, the largest cryptocurrency exchange in the United States.
A difficult process begins for Coinbase with the court decision!
The decision partially granted Coinbase’s request to dismiss the Securities and Exchange Commission’s lawsuit alleging the company violated its rules. This is a partial win for Coinbase. However, it means a long and expensive court battle for the stock market. The decision by U.S. District Judge Katherine Failla allows the exchange to proceed with its lawsuit against Coinbase, which claims it operates as an unregistered exchange, broker and clearing house. In this context, the decision includes the following statements:
The Court found that the SEC adequately argued that Coinbase operated as an exchange, a broker, and a clearing house within the meaning of the federal securities laws and that it engaged in unregistered offers and sales of securities through its Staking Program.
cryptokoin.comAs you follow from , the SEC filed a lawsuit against Coinbase in June. The SEC said Coinbase facilitated the trading of at least 13 tokens that are required to be registered as securities. It also alleged that it operated illegally as a national securities exchange, broker and clearing house without registering with the regulator.
What forms the basis of the case?
The lawsuit against the world’s largest publicly traded cryptocurrency exchange is a high-water mark in the regulator’s campaign to apply US securities law to digital asset companies. To do this, the SEC relies heavily on a U.S. Supreme Court decision that laid out a test for when an investment constitutes a security. An important part of this test concerns the issue of whether returns are due “solely to the efforts of others.” Coinbase argues that crypto assets, unlike stocks and bonds, do not meet this definition, a position held by the vast majority of the crypto industry.
In the few cases that have made it to court, judges have mostly agreed with the SEC that the crypto assets at issue are securities that, unlike assets such as commodities, are tightly regulated, must be registered with the SEC by their issuers, and require detailed disclosures to inform investors of potential risks.
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