{"id":19605,"date":"2023-06-29T18:34:08","date_gmt":"2023-06-29T18:34:08","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/nft\/coinbase-challenges-the-sec-seeks-case-dismissal-defending-its-practices\/"},"modified":"2023-06-29T18:34:11","modified_gmt":"2023-06-29T18:34:11","slug":"coinbase-challenges-the-sec-seeks-case-dismissal-defending-its-practices","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/nft\/coinbase-challenges-the-sec-seeks-case-dismissal-defending-its-practices\/","title":{"rendered":"Coinbase Challenges the SEC: Seeks Case Dismissal, Defending Its Practices"},"content":{"rendered":"
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Coinbase has sent waves throughout Web3 by taking a stand against the recent lawsuit filed by the U.S. Securities and Exchange Commission (SEC). In a response submitted on June 28, the exchange giant contends that the case lacks a solid legal foundation and should be dismissed. The action comes amidst ongoing tension between the digital asset industry and the top U.S. securities regulator.<\/p>\n

Where SEC vs. Coinbase stands<\/h2>\n

The SEC\u2019s suit, lodged in early June shortly after a similar suit against Binance, accused Coinbase of operating as an unregistered securities exchange, citing over a dozen tokens on the platform as unregistered securities, including notable coins such as ADA and SOL. The regulator\u2019s complaint claims Coinbase violated securities law, a charge the company refutes, and seeks to argue in court.<\/p>\n

Paul Grewal, Chief Legal Officer at Coinbase, has been significantly outspoken about legal proceedings thus far. Taking to Twitter, he has continuously reinforced that his company does not list securities and has been consistent in its practices since the SEC conducted a thorough review of its operations before its public debut in April 2021.\u00a0<\/p>\n

He expressed that Coinbase\u2019s business model has not fundamentally changed since the IPO, and the same procedures for listing tokens have been followed.<\/p>\n

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Today @coinbase<\/a> filed our answer and notice of intent to file a motion to dismiss the @SECGov<\/a> case against us. You can read our response for yourself \u2013 our arguments speak for themselves. 1\/2 https:\/\/t.co\/Ld2ZEejhyM<\/p>\n

\u2014 paulgrewal.eth (@iampaulgrewal) June 29, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

Coinbase\u2019s response<\/h2>\n

In the legal response, Coinbase argues that the cryptocurrencies on its platform do not classify as securities since they are not part of an investment contract \u2013 a crucial criterion for a digital asset to be deemed a security. Moreover, the exchange stated that the issuers of the tokens listed on its platform owe no obligations to investors, which further substantiates its claim that these transactions do not fall under securities transactions.<\/p>\n

The company also underlines the SEC\u2019s endorsement of its public listing in April 2021 as evidence of the regulator\u2019s prior acceptance of its business operations.<\/p>\n

Coinbase has requested that the court allow a motion for judgment, proposing a seven-week schedule for its motion, the SEC\u2019s opposition, and its response. Grewal indicated on Twitter<\/a> that the exchange plans to file this motion to dismiss the case, stating that the SEC\u2019s allegations far exceed existing law.<\/p>\n

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We welcome dialogue any time with any regulator, including the SEC, and believe new legislation and rulemaking is the right path forward. But the claims in this case go far beyond existing law \u2013 and should be dismissed. 2\/2 https:\/\/t.co\/3CID7vYURP<\/p>\n

\u2014 paulgrewal.eth (@iampaulgrewal) June 29, 2023<\/a><\/p><\/blockquote>\n

Coinbase maintains that the SEC has not provided sufficient clarity on how existing securities laws apply to digital assets, leading to confusion and misinterpretation within the crypto industry. A sentiment echoed by Binance, which recently accused the SEC of deliberately misleading the public through statements it made surrounding a different lawsuit.<\/p>\n

On the other end of the spectrum, though, the SEC, led by Chair Gary Gensler, asserts that many digital assets are indeed securities and that crypto firms are contravening its rules by failing to register. Gensler has also warned of the risks to investors as crypto firms often combine roles, such as custody and exchange services, traditionally handled by separate regulated entities.<\/p>\n

It\u2019s uncertain whether or not Coinbase\u2019s clash with the SEC may potentially develop into a protracted legal battle, considering precedents such as the SEC\u2019s ongoing three-year court dispute with Ripple Labs. Undoubtedly, though, the outcome could shape the future regulatory landscape for digital assets for the foreseeable future.<\/p>\n

Editor\u2019s note: This article was written by an nft now staff member in collaboration with OpenAI\u2019s GPT-4.<\/em><\/p>\n<\/p><\/div>\n