Even if all of the claims made in the case are true, it is claimed in the petition to dismiss that the plaintiff lacks a legitimate legal claim.
In their ongoing legal dispute, the United States Securities and Exchange Commission (SEC) has filed a request to dismiss Coinbase’s case. This demonstrates Coinbase’s prompt response to the SEC’s accusations.
The U.S. District Court for the Southern District of New York received the move to dismiss on June 29th. Insinuating that the SEC was acting outside of its legal jurisdiction, Coinbase expressed reservations about how the agency was interpreting securities regulations.
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Related: Coinbase wins big in Supreme Court case, setting precedent for crypto
Coinbase has indicated that it will fight the SEC’s action by submitting the move to dismiss. Even if the claims made in the lawsuit are accurate, the corporation contends, the SEC lacks a strong legal case. Coinbase’s legal team stated in the filing:
“Even if the SEC were correct that the assets and services it identifies are within the scope of its existing regulatory authority, this [legal] action must be dismissed on independent grounds that it violates Coinbase’s due process rights and constitutes an extraordinary abuse of process.”
The SEC’s application of securities regulations to digital tokens, according to Coinbase, is in violation of established legal frameworks and should be challenged. Paul Grewal, the business’s chief legal officer, stated that the SEC’s allegations “go far beyond existing law” and should be rejected.
Investment contracts are included in the SEC’s definition of a security, according to the Supreme Court’s Howey test interpretation. This criteria takes into account transactions in which parties spend money in a joint venture and anticipate gains mostly from the labor of others.
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The attorneys for Coinbase further contend that the SEC found Coinbase’s registration statement to be valid in 2021, allowing the business to sell its shares to investors during its initial public offering. As Coinbase queries the SEC’s position on securities regulations, this raises the possibility of a mismatch in the agency’s activities.
Related: Coinbase slams SEC for dragging its feet on crypto exchange rule-making
Coinbase’s determination to contest the SEC’s case and the application of securities laws to cryptocurrencies is indicated by the motion to dismiss. The legal conflict between Coinbase and the SEC has wider ramifications for the US regulatory environment governing digital assets.