In the ongoing legal standoff between Coinbase and the U.S. Securities and Exchange Commission (SEC), the SEC is putting up a resolute fight against the crypto exchange’s attempts to get a securities law violation lawsuit thrown out.
It all started in June when the SEC accused Coinbase of non-compliance to register as a securities exchange. Swiftly lobbing a counter-attack, Coinbase sought to undermine the SEC’s case with a pre-trial ruling, declaring that cryptocurrency transactions bear no resemblance to the traditional investment contracts.
Undeterred, the SEC recently responded urging the court to reject Coinbase’s bid for dismissal. The intricacies of its justification stem from perceived “fatal flaws” in Coinbase’s defence, according to CoinDesk’s Tuesday update. The crux of the case lies in the interpretation of the Howey test. This test is a key determinant in the legal classification of an asset as an investment contract or a security in the realm of SEC regulation.
Taking a firm stance, Coinbase appeals that crypto dealings fail to meet the Howey test criteria due to the lack of any formal contracts. On the contrary, the SEC counters the claim arguing that a formal contract isn’t an obligatory precursor to an investment contract. According to the SEC, Coinbase’s facilitation of “investment contract” transactions entitles its customers to protection under federal securities laws.
Adding another dimension to the sharply contrasting viewpoints, Coinbase’s Chief Legal Officer, Paul Grewal, takes to social media platform X on Tuesday. He reaffirms the exchange’s enduring viewpoint that the assets listed on its platform aren’t securities and hence exist outside the SEC’s jurisdiction—a position they’ve staunchly held since June this year.
Moreover, the SEC has also highlighted that turning a blind eye to Coinbase going public does not equate to endorsing the platform’s compliance with the securities laws. A point that Coinbase refutes, asserting that the SEC’s consent to allow the exchange to go public infers the company’s operations abide by the securities regulations. This latest development sets a new milestone in the edgy faceoff, as the tangled regulations in the volatile crypto market continue to leave room for diverse interpretations.
Source: Cryptonews
