SEC Intensifies Battle with Coinbase

In a recent turn of events, the U.S. Securities and Exchange Commission (SEC) is amplifying its legal efforts against Coinbase, America’s premier cryptocurrency exchange. In the eye of a legal hurricane, the crypto-industry awaits the implications of this tug of war, as both entities lock horns over the status of digital assets.

NEW: The SEC is intensifying its case against Coinbase 😮

The agency has asked a judge to dismiss Coinbase's attempt to have the lawsuit thrown out 👀

Coinbase claims the SEC "abused its discretion" by alleging the sale of unregistered securities. pic.twitter.com/PcmvABdcG6

— Bitcoin News (@BitcoinNewsCom) October 4, 2023

The SEC’s Argument

As per a detailed report from BNN Bloomberg, the SEC argues that the crypto giant has for years avoided its regulations by unlawfully functioning as an unregistered exchange, brokerage, and clearing agency. The SEC postulated, “Each crypto asset issuer invited investors…to expect the value of their investment to increase based on the issuer’s broadly-disseminated plan.”

Furthermore, the SEC has been adamant about most tokens being subject to their jurisdiction. They emphasize that trading platforms should adhere to registration protocols. In an attempt to clarify their stance, the agency stated public declarations by issuers “led investors, including those on Coinbase’s platform, to reasonably expect profits from the issuers’ efforts.”

Coinbase’s Defense

Paul Grewal, Coinbase’s Chief Legal Officer, didn’t shy away from expressing his dissent. Taking to X (previously Twitter), he characterized the SEC’s claims as “the same old same old.” Grewal is assertive about Coinbase not dealing in securities and urges the SEC to draft fresh crypto-specific regulations rather than resorting to enforcement tactics.

The @SECgov just filed its opposition to our motion to dismiss their case against @Coinbase. It’s more of the same old same old. But don’t just take my word for it – take a look for yourself. 1/7 https://t.co/QMdkRoiq0V

— paulgrewal.eth (@iampaulgrewal) October 3, 2023

Grewal’s assertion gains traction from a precedent where another federal judge decreed that sales of Ripple Labs’ XRP on public exchanges did not qualify as securities offerings.

Deciphering The Regulatory Conundrum

The SEC’s standard tool for determining an asset’s status has its roots in a 1946 Supreme Court case. However, crypto advocates believe that a sizable portion of digital assets don’t align with this dated criteria. They press for the SEC to accommodate the distinct attributes of digital currencies.

With the lawsuit titled Securities and Exchange Commission v. Coinbase Inc. underway in the Southern District of New York, the outcome promises to shape the regulatory future of cryptocurrency in the U.S.

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