In a recent filing, the U.S. Securities and Exchange Commission (SEC) stated that Coinbase, a multi-billion dollar entity well-versed in legal affairs, admitted years ago that its listings could potentially be subject to federal securities laws. This comes as a counter to Coinbase’s argument against the SEC’s jurisdiction to file a lawsuit against them, claiming a lack of sufficient authority.
The SEC had sued Coinbase just a month ago, contending that it functioned as an unregistered broker, clearinghouse, and exchange rolled into one. According to the SEC, Coinbase listed at least 13 different cryptocurrencies deemed as unregistered securities. It would be worth noting that the SEC rejected any judgment that Coinbase might file and urged the court to dismiss Coinbase’s claim that the lawsuit breaches major questions doctrine amongst other issues.
Interestingly, Coinbase, in the SEC’s perspective, claims ignorance of the possibility that its activities were in violation of federal securities laws. They further assert that the SEC, by approving Coinbase’s registration statement in 2021, cemented the legality of Coinbase’s activities not only at that time but forever after.
Counter-intuitively however, the SEC retorted that Coinbase had, in the past, implemented the very legal structure laid down by the U.S. Supreme Court to authenticate whether certain cryptocurrencies fulfilled the prerequisites of federal securities laws. To add to the intrigue, Coinbase reputedly dissuaded crypto issuers from making any affirmations typically associated with securities.
Delving more into the controversy, Coinbase’s own public filings divulge that one conceivable risk to its investors is the possibility of its listed assets being classed as securities. The SEC indicated that Coinbase’s actions reflect an awareness that securities laws could be applicable to its activities, and understood the rules that need to be considered in assessing the legality of its conduct.
Further, the SEC alleges, Coinbase decided to undertake this potential risk purporting it to be a calculated strategy in the interest of its business expansion. This argument raises questions about the true intentions and legal understanding of the platform.
Ultimately, the contention between the SEC and Coinbase serves to highlight the increasing regulatory hurdles cryptocurrencies face. This distinction in viewpoints might very well shape the future of the industry.
Source: Coindesk
