Key takeaways:
- Coinbase has claimed that the US SEC overreached its jurisdiction by classifying crypto listed on the exchange as securities.
- Coinbase Chief Legal Officer Paul Grewal reiterated the assertions, stating that the SEC’s criteria have “no limiting function at all.”
In its last attempt to get a lawsuit filed by the securities regulator dismissed, Coinbase claimed that the US Securities and Exchange Commission overreached its jurisdiction by classifying cryptocurrencies listed on the exchange as securities.
Coinbase criticized the SEC in a filing on October 24 in a New York District Court, arguing that the regulator’s definition of security was too broad and that the cryptocurrencies the exchange lists are not subject to its jurisdiction.
“The SEC’s authority is limited to securities transactions. Not every parting of capital with a hope of gain qualifies, and trades over Coinbase are only securities transactions if they involve ‘investment contracts.’ The transactions at issue here do not.”
Coinbase asserted that the SEC has expanded its authority “radical” and that it has jurisdiction “over basically all investment activity,” both of which are reserved for Congress alone in accordance with the big questions doctrine.
Coinbase Chief Legal Officer Paul Grewal reiterated the assertions in an October 24 X post, stating that the SEC’s criteria have “no limiting function at all.”
Coinbase has filed a response to the SEC’s rebuttal on October 3. In that response, the SEC reiterated its conviction that the cryptocurrencies Coinbase listed were investment contracts under the Howey test and requested that the court reject Coinbase’s motion for dismissal.
On June 6, the SEC filed a lawsuit against Coinbase, claiming that by listing many tokens that it views as securities and failing to register with the agency, the exchange had broken US securities laws.
On June 29, Coinbase submitted a move for judgment, claiming that the SEC was abusing its authority and infringing on Coinbase’s right to due process.
The case is overseen by Judge Katherine Polk Failla, who has the authority to order Coinbase and the SEC to appear in court for oral arguments, after which she will either dismiss the matter or move to have it heard in front of a jury.
