- Coinbase has argued that the SEC has no jurisdiction over the cryptocurrencies it has targeted in its lawsuit against the exchange
- In a recent filing, the exchange argued that the coins cited by the SEC as securities don’t meet the criteria
- The SEC sued Coinbase at the start of June over the alleged sale of securities
Coinbase has argued that the Securities and Exchange Commission (SEC) has no jurisdiction over the cryptocurrencies it has targeted in its latest rebuttal of the agency’s lawsuit against it. The SEC sued Coinbase earlier this month, defining a dozen of the cryptocurrencies offered through its wallet or trading platforms as unregistered securities. Coinbase hit back in a filing today in which it claimed that the coins at the heart of the SEC charges are not investment contracts and therefore are not securities, meaning they do not come within the SEC’s purview.
Coinbase Expands on Former Arguments
In its filing, Coinbase expanded on arguments it has previously put forth in tweets and blog posts, claiming that cryptocurrencies listed on its secondary market platform are not involved in any agreements where a promoter sells an asset linked to a contract. To illustrate this, the company specifically references the Howey case, on which all securities laws are based and asserts that the issuers of these tokens bear no obligations towards investors:
Because no such obligations are carried in the transactions over Coinbase’s secondary market exchange, and because the value that Coinbase purchasers receive through these transactions inheres in the things bought and traded rather than in the businesses that generated them, the transactions are not securities transactions.
In its filing, Coinbase presents two primary arguments against the SEC’s enforcement actions. Firstly, Coinbase asserts that the case should be dismissed due to violations of its due process rights and an abuse of the legal process, even if the SEC’s claim that the assets and services in question fall under its regulatory authority is valid. Coinbase contends that it actively sought guidance from the SEC on how federal securities laws apply to digital assets, and the SEC’s undisclosed change in its view of its authority raises concerns about fairness and transparency.
Coinbase Says SEC Wanted to Attack It
Furthermore, Coinbase argues that the SEC’s prioritization of enforcement actions over rulemaking is problematic. The filing suggests that the SEC deliberately chose to pursue enforcement actions against Coinbase instead of providing clear rules and regulations for the digital asset industry.
The exchange also raises concerns about the lack of comprehensive guidance, asserting that this approach by the SEC hinders fair treatment and undermines the establishment of a transparent regulatory framework for the industry.
