Amid Coinbase’s ongoing legal battle with the SEC, the U.S. cryptocurrency exchange has filed a motion to dismiss the SEC’s complaint.
in legal document Coinbase filed the lawsuit in the U.S. District Court for the Southern District of New York on Thursday, June 29, expressing concerns about the SEC’s interpretation of securities law, suggesting the agency was acting beyond its legal purview.
The move underscores Coinbase’s determination to challenge the SEC lawsuit. The motion to dismiss argues that even if all the allegations in the lawsuit were true, the plaintiffs have no valid legal claim. Coinbase’s legal team stated in the filing:
“Even if the SEC correctly believes that the assets and services it has identified are within the purview of its existing regulator, this (legal) action must be dismissed on independent grounds that it violates Coinbase’s due process rights and constitutes a violation of the process. Serious abuse.”
The SEC lawsuit alleges that Coinbase facilitated the unregistered trading of 12 digital tokens deemed securities.
The firm disputed that claim, arguing that the SEC is applying securities laws to certain digital tokens in a way that clearly deviates from the existing legal framework. Coinbase Chief Legal Officer Paul Grewal tweeted on June 29 that the SEC’s claims “go far beyond existing law” and should therefore be dismissed.
today @coinbase Filed our response and notice of intent to file a motion to dismiss @SECGov for our case. You can read our responses for yourself – our arguments speak for themselves. 1/2 https://t.co/Ld2ZEejhyM
— paulgrewal.eth (@iampaulgrewal) June 29, 2023
The SEC’s definition of securities includes investment contracts, which the Supreme Court interpreted in the Howey test to include transactions in which individuals invest money in a common enterprise with the expectation of profiting primarily from the efforts of others. In the lawsuit, the SEC named 12 crypto tokens as securities: Solana (SOL), Cardano (ADA), Polygon (MATIC), The Sandbox (SAND), Flow (FLOW), Internet Computer (ICP), Near (NEAR ) and Dash (Dash).
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Lawyers for the exchange further argued that in 2021, the SEC declared valid Coinbase’s registration statement filed with the Commission, allowing the company to sell its stock to investors when it went public.
The approval follows an extensive months-long review process and in-depth discussions with Coinbase. This enables Coinbase to trade more than 240 tokens on its spot exchange, including six of the 12 currently in dispute.
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