The SEC claims that Coinbase freely informed its shareholders about the danger that federal securities laws would apply to its business operations after acknowledging the likelihood that they might do so.
In a letter dated July 7th, the Securities and Exchange Commission (SEC) responded to Coinbase’s assertions that it lacks the authority to pursue legal action against the cryptocurrency exchange. The letter emphasizes Coinbase’s awareness of the possibility that federal securities laws could be applied to its business activities and its acknowledgement that assets exchanged on its platform might be considered securities.
The Securities and Exchange Commission (SEC) said that Coinbase, a “multi-billion-dollar entity advised by sophisticated legal counsel,” had openly disclosed to its shareholders the possibility that its actions would violate federal securities laws. The regulator claims that Coinbase is seeking to set its own standards for deciding what qualifies as an investment contract while violating long-standing legal precedents.
In response to a previous filing filed by Coinbase on June 28th, the SEC has responded. Coinbase stated in that statement that it intended to make a petition for judgment, which is frequently done when a party feels there isn’t a real issue of material fact in a case.
In a prior filing, Coinbase cited SEC Chair Gary Gensler’s stated claims that there is no market regulator for cryptocurrency exchanges and that only Congress has the right to impose regulations on them. Coinbase further emphasized that the SEC brought accusations against the business two years after it went public, despite the fact that the regulator and the public had been informed in great detail about the actions.
The SEC accused Coinbase of selling unregistered securities since 2019 on June 6th. The legal conflict between Coinbase and the SEC is based on the claims. On July 13th, there will be a pre-motion meeting to talk about the matter.
In contrast to Coinbase’s assertion that the SEC lacks jurisdiction, the SEC’s statement stresses Coinbase’s understanding of the potential application of federal securities laws to its operations. The rebuttal aims to disprove Coinbase’s claims and demonstrate the SEC’s right to bring the alleged securities breaches to justice.
Important questions concerning the regulatory environment surrounding cryptocurrencies and the applicability of securities laws to digital assets are raised by the ongoing litigation dispute between Coinbase and the SEC. The verdict in the case could have a big impact on the entire crypto business.
The SEC’s response clarifies the divergent viewpoints held by the watchdog and Coinbase, as well as the reasoning and legal tactics each side is using. The court’s decision will finally resolve the jurisdictional question and have an impact on how Coinbase conducts business and complies with securities regulations.