Coinbase Claims SEC Lacks Authority Over Cryptos on its Platform.
Crypto exchange Coinbase argues its digital assets are not securities, in a lawsuit with the SEC.
In response to a lawsuit from the U.S. Securities and Exchange Commission (SEC),Coinbase, a top U.S. crypto exchange, stated that digital assets on its platform aren't under SEC's control because they are not investment contracts or securities.
In early June, the SEC claimed that some cryptocurrencies available on Coinbase were unregistered securities. Coinbase argued back, saying the cryptocurrencies on its platform do not involve any contracts linked to asset sales by promoters, referencing a notable Supreme Court case (Howey) to clarify their point.
Coinbase's statement further explained that token issuers have no duties to investors. Transactions on Coinbase's platform are not securities transactions because their value comes from the traded items, not the businesses that created them.
In addition to its defense, Coinbase maintained that the SEC's current Chair, Gary Gensler, had altered his stance on crypto regulation since taking office. It also emphasized that Coinbase has repeatedly asked for regulatory guidelines and has complied with existing securities law guidance. Coinbase suggested the SEC was favoring enforcement actions over rulemaking.
Lastly, Coinbase has asked the judge in charge of the case for a ruling on its claim that the SEC has violated its rights and possibly breached the "major questions" doctrine. The company requested a 7-week timeline for filing its motion, receiving the SEC's opposition, and responding to that opposition.
