Coinbase Global asked a judge on Friday to end a U.S. Securities and Exchange Commission lawsuit accusing the world’s largest publicly traded cryptocurrency exchange of violating federal securities laws.
In a filing in Manhattan federal court, Coinbase said the SEC has no authority to sue because the digital assets and services it objects to do not qualify as securities, saying the agency went too far.
In a post on X (formerly Twitter), Coinbase Chief Legal Officer Paul Grewal said: “Our core argument is simply that we do not offer an ‘investment contract’ as the term has been bound by the Supreme Court and others. Decades of interpretation of precedent.”
A spokesman for the SEC declined to comment beyond the public filing.
Coinbase was sued by the SEC in June, accused of illegally operating a national securities exchange, brokerage and clearinghouse without registering with regulators.
Friction between the crypto industry and the top U.S. market regulator is escalating as the U.S. Securities and Exchange Commission files a series of lawsuits against the world’s largest crypto platforms.
The SEC said the platforms would need to register and operate in a similar way to trading stocks or bonds, while the cryptocurrency industry said new legislation was needed. Companies are closely watching the lawsuit between the SEC and Coinbase, which some onlookers see as an “existential” conflict.
Last month, two federal judges in Manhattan were at odds over whether regulators were overreaching in trying to police the industry in a SEC lawsuit against cryptocurrency firms Ripple Labs and Terraform.
Coinbase referred to the recent Ripple saga in its Friday filing, noting that the SEC’s lawsuit hinges on the types of transactions that the judge deems fall outside the regulator’s jurisdiction.
Coinbase shares fell 3.8 percent on Friday.
© Thomson Reuters 2023
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