The United States Securities and Exchange Commission (SEC) is fighting to keep its lawsuit against Coinbase alive.
In an October 3 filing with the New York District Court, the Commission asked a federal judge to deny Coinbase’s motion to dismiss its lawsuit against the cryptocurrency exchange.
The Genesis
Recall that the SEC filed a lawsuit against Coinbase in June, alleging that the crypto exchange violated federal securities laws by operating as an unregistered broker, exchange, and clearing agency since 2019. The agency also alleged that Coinbase’s product, which allowed customers to earn rewards on cryptocurrencies, constituted an illegal securities sale.
In response, Coinbase filed a motion in August, asking a federal court to dismiss the case, arguing that the agency had no authority to pursue its lawsuit because the exchange does not offer securities.
SEC Fights to Keep Lawsuit Alive
In its latest filing, the SEC reiterated its stance that the products offered by the exchange were securities, citing the Howey test.
“Each crypto asset issuer invited investors — including purchasers on Coinbase’s platform — reasonably to expect the value of their investment to increase based on the issuer’s broadly-disseminated plan to develop and maintain the asset’s value,” the SEC said in the filing.
The SEC added that Coinbase knows its cryptocurrencies are securities if they meet the Howey test criteria. The agency also disagreed with Coinbase’s argument that the agency has no authority over the crypto sector until Congress gives it that power.
“The SEC has not assumed for itself any new power to do what the federal securities laws do not already expressly authorize it to do,” the SEC said.
In a post on X (formerly Twitter), Coinbase chief legal officer Paul Grewal called the latest SEC filing “more of the same old same old.”
Grewal reiterated Coinbase’s argument, saying that the “assets we list on our platform are not securities and are not within the SEC’s jurisdiction.”
