Coinbase Says SEC Has No Authority To Sue Crypto Companies. In a letter filed Wednesday, June 29, 2023, with crypto exchange Coinbase in Manhattan federal court, Coinbase said the SEC did not have the authority to file civil lawsuits because the assets traded on its platform are not securities.
The largest US crypto exchange also said it would ask a judge to dismiss a US Security and Exchange Commission lawsuit claiming it violated the law by failing to register its business.
“The SEC can pursue its claims only if the tokens and betting services it has identified are securities,” Coinbase said, quoted from Channel News Asia, Sunday (27/2023).
Read Also: SEC Sues Binance And Changpeng Zhao Over Allegations Of Violating The Securities Code
The SEC sued Coinbase on June 6, saying it made billions of dollars acting as an intermediary including by trading at least 13 crypto assets, or tokens, such as Solana, Cardano and Polygon that should have been registered securities.
Coinbase is also being sued over a staking program in which it pools crypto assets to support activity on the blockchain network, in exchange for a reward it gives out to customers after taking a commission for itself.
The lawsuit was filed one day after the SEC sued Binance, the world’s largest cryptocurrency exchange, accusing it of inflating trading volumes, mishandling customer funds and lying about its operations.
SEC chairman Gary Gensler has tried to assert jurisdiction over the crypto industry, which, he says, is undermining investor confidence in the US capital markets.
Previously, the largest cryptocurrency exchange in the US, Coinbase said it would ask a judge to dismiss a lawsuit by the US Securities and Exchange Commission (SEC) which claimed it had violated the law by failing to register its business.
In a letter filed just before midnight Wednesday in Manhattan federal court, Coinbase said the SEC does not have the authority to bring civil suits because trading assets on its platform are not “investment contracts,” meaning they are not securities.
“The SEC can pursue its claims only if the tokens and betting services it has identified are securities,” Coinbase said in the letter, quoted from Yahoo Finance, Friday (30/6/2023).
The SEC sued Coinbase on June 6, saying it made billions of dollars by acting as an intermediary including by trading at least 13 crypto assets, or tokens, such as Solana, Cardano, and Polygon that should have been registered as securities.
Coinbase is also being sued over a “staking” program in which it pools crypto assets to support activity on the blockchain network, in exchange for a “gift” it gives out to customers after taking a commission for itself.
The lawsuit was filed one day after the SEC sued Binance, the world’s largest cryptocurrency exchange, accusing it of inflating trading volumes, mishandling customer funds and lying about its operations.
Coinbase Says SEC Has No Authority To Sue Crypto Companies. SEC chairman Gary Gensler has tried to assert jurisdiction over the crypto industry, which he says is undermining investor confidence in US stock markets.
Earlier, the chief executive of Nasdaq-listed cryptocurrency exchange Coinbase, Brian Armstrong, issued an opinion on Twitter on Tuesday, June 6, 2023 to address a lawsuit filed against his exchange by the U.S. Securities and Exchange Commission (SEC).
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Securities regulators accused Coinbase of operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agent, as well as selling unregistered securities.
Armstrsong said regarding the SEC’s complaint against Coinbase, he is proud that Coinbase is representing the industry in court to finally get clarity around crypto rules.
The Coinbase executive went on to outline a number of factors that influenced the exchange’s alleged breach of securities laws.
“There was no entry line and our list tried, over and over again, so we didn’t list securities. We reject most of the assets we review,” Armstrsong said on Twitter, quoted from Bitcoin.com, Friday (9/6/2023).
Coinbase also stated in March, after receiving Wells’ notice from the SEC, it tried to register with regulators but the securities watchdog would not let crypto companies go in and register.
Furthermore, Armstrong pointed out in a tweet Tuesday that the SEC and the Commodity Futures Trading Commission (CFTC) had made statements to the contrary, and did not even agree on what is a security and what is a commodity.
One of the main topics that the two regulatory bodies disagree on is ether (ETH) classification. While SEC Chairman Gary Gensler claims all crypto tokens, apart from bitcoin (BTC), are securities.
Previously, the US Securities and Exchange Commission (SEC) expanded its crackdown on the crypto industry by accusing Coinbase Global Inc of running an illegal exchange.
Reporting from Yahoo Finance, Wednesday (7/6/2023), in a 101-page lawsuit filed Tuesday, June 6, 2023 in federal court in New York, the SEC accuses Coinbase for years of circumventing its rules by letting users trade lots of actual crypto tokens. are unregistered securities.
A day earlier, regulators sued cryptocurrency exchange Binance, alleging multiple violations of US securities regulations.
The SEC is moving against Coinbase, the largest U.S. cryptocurrency exchange, after SEC Chairman Gary Gensler repeatedly argued most crypto tokens should be subject to his agency’s oversight and the industry had largely broken the law.
Read Also: Reasons Hong Kong Will Lift Crypto Trading Ban
At the same time, US regulators are warning banks to stay away from cryptocurrencies due to potential risks to the financial system, making it difficult for US citizens to invest.
The SEC civil lawsuit stands out because of Coinbase’s high profile in the US, and its status as a publicly traded company. Coinbase shares were down 12 percent in New York trading. At one point on Tuesday, the decline cut around USD 1.5 billion or the equivalent of IDR 223.1 trillion (assuming an exchange rate of IDR 14,879 per US dollar) from the company’s market capitalization.
A Blow To The Crypto Industry
Coinbase Says SEC Has No Authority To Sue Crypto Companies. The case against Coinbase, coupled with Binance forms a blow to the industry. The SEC accused Binance, the world’s largest crypto platform, and its chief executive, Changpeng Zhao, of mishandling customer funds, misleading investors and regulators, and violating securities rules.
The SEC requested a temporary restraining order on Tuesday to freeze some assets as part of the case.
