Coinbase has filed a motion seeking to dismiss the lawsuit brought against it by the U.S. Securities Exchange Commission (SEC). In a court filing submitted on August 4, 2023, the exchange accused the U.S. SEC of overstepping its jurisdiction.
In June 2023, the SEC filed charges against the American crypto exchange over claims that it violated securities laws. The securities regulator accused the exchange of operating without proper registration as a securities broker since 2019, two years before its initial public offering (IPO) in April 2021. The securities regulator also accused Coinbase of operating as an unregistered clearing agency and bypassing securities market disclosure requirements.
In its motion to dismiss the lawsuit, Coinbase argued that the regulator had no authority to pursue its case because its services did not qualify as securities.
“Transactions on Coinbase’s platform and Prime do not include any contractual commitments to deliver future value representing a business’s income, profits, or assets,” the court filing stated.
“These transactions are actually commodity sales, where both parties’ obligations are fully satisfied as soon as the digital token is exchanged for payment.“
To support its case, Coinbase attached 10 different exhibits, including transcripts from the SEC’s case against LBRY and previous orders involving Howey Test questions. The exchange also invokes the Major Questions Doctrine, asserting that the SEC lacks clear authorization from the U.S. Congress to encompass the cryptocurrency industry within its regulatory scope.
While announcing the new development, Coinbase’s Chief Legal Officer, Paul Grewal, noted that the SEC has “trampled the strict boundaries on its basic authority set by Congress.”
During an earnings call earlier this week, Coinbase had already hinted that it would file to dismiss the lawsuit. Grewal said during the call the exchange believed it could win the case.
The SEC has until October 3, 2023, to file a response to Coinbase’s motion. Additionally, any amicus briefs in support of Coinbase can be filed until August 11, 2023.
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