On Thursday, Coinbase responded to the Securities and Exchange Commission’s (SEC) lawsuit, claiming that the regulator’s allegations are illegal and should be rejected.
By arguing that none of the assets exchanged on its platform were securities, Coinbase answered the SEC’s main charge that it was running an unregistered securities exchange in the 177-page response.
Drop SEC Lawsuit
When the SEC accepted the cryptocurrency company’s registration statement at the time of its Direct Public Offering, Coinbase already had six of the twelve assets that the SEC claimed in its lawsuit to be securities in active trading.
“No major changes to Coinbase’s operations since 2021 are asserted, thus the SEC’s about-face is not the result of any such developments. Not at all, according to fresh information, according to the filing.
- Coinbase denies SEC lawsuit’s illegal allegations.
- SEC claims Coinbase had six active trading assets upon DPO.
- Coinbase should drop enforcement action due to violation of due process rights.
In his testimony before Congress in May 2021, Gensler said that the SEC lacked the legal power to regulate Coinbase and related companies. This assertion was cited in the complaint. At the time, Gensler asserted that there was no market regulator for cryptocurrency exchanges operating outside of a legal framework.
Coinbase, even if the SEC has regulatory authority over digital assets, should drop the enforcement action on its own merits because it violates the exchange’s due process rights and amounts to “an extraordinary abuse of the system.”
Coinbase requested that the SEC’s complaint be dismissed and that judgment be entered in favor of all claims.
“In other words, they urge the court to declare that Coinbase has won on the merits. This is unusual and, in my opinion, a greater news item than the response and impending move to dismiss commented ConsenSys senior attorney Bill Hughes on Twitter.
