Trusted

Breaking Court Denies Coinbase’s Motion to Dismiss SEC Lawsuit

2 mins
Updated by Ali Martinez
Join our Trading Community on Telegram

In Brief

  • Judge Failla denies Coinbase's dismissal motion, allowing the SEC lawsuit to proceed.
  • The lawsuit claims Coinbase's Staking Program operates without necessary registration.
  • The court partially sided with Coinbase regarding the SEC's claims about its Wallet.
  • promo

US District Judge Katherine Polk Failla has denied Coinbase’s motion to dismiss the Securities and Exchange Commission’s (SEC) lawsuit against it.

The SEC’s case alleges that Coinbase operates as an unregistered exchange, broker, and clearing agency and claims that its Staking Program involves the unregistered offer and sale of securities.

Coinbase Goes Into Deep Waters With the SEC

This decision allows the SEC to proceed with its lawsuit. Therefore, it spotlights the conflict between cryptocurrency platforms and regulatory authorities aiming to enforce federal securities laws.

The Court found merit in the SEC’s allegations against Coinbase’s Staking Program that it constituted an unregistered offer and sale of securities. Still, Judge Failla provided a silver lining for Coinbase by granting its motion regarding the SEC’s claims related to Coinbase Wallet.

“Even when considered in the aggregate, the factual allegations concerning [Coinbase] Wallet are insufficient to support the plausible inference that Coinbase ‘engaged in the business of effecting transactions in securities for the account of others’ through its Wallet application,” reads the filing.

This ruling arrives amid growing scrutiny over the cryptocurrency industry, which has been clamoring for clear regulations. Experts argue that this case could influence future regulatory frameworks for cryptocurrency exchanges, emphasizing the need for such platforms to align with existing securities laws.

“Great progress on the SEC case – and huge win for self-custodial wallets. This ensures the onchain ecosystem will continue to innovate and create economic freedom around the world. We’ll continue fighting for your right to use crypto, and to get clarity around the rules, until the job is done,” Coinbase CEO Brian Armstrong said.

Likewise, the Head of Legal at STORM Partners, Nicola Massella, told BeInCrypto that the ruling could be seen as a win for the industry, especially for the DeFi sector.

“The court’s decision brings much-needed clarity to what constitutes brokerage activities within the context of crypto transactions under US law. It underscored that the activities related to Coinbase Wallet, notably absent from negotiating transactions, making recommendations, or directly handling customer funds, do not align with traditional brokerage functions. This clarification is crucial, as it delineates the boundary between technology providers and financial brokers,” Massella said.

Read more: Coinbase Review 2024: The Best Crypto Exchange for Beginners?

The court directs Coinbase and the SEC to submit a proposed case management plan by April 19, 2024, while stakeholders await further developments in this landmark case.

Top crypto projects in the US | November 2024
Coinbase Coinbase Explore
Coinrule Coinrule Explore
Uphold Uphold Explore
3Commas 3Commas Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | November 2024
Coinbase Coinbase Explore
Coinrule Coinrule Explore
Uphold Uphold Explore
3Commas 3Commas Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | November 2024

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Frame-2466.jpg
Bary Rahma
Bary Rahma is a senior journalist at BeInCrypto, where she covers a broad spectrum of topics including crypto exchange-traded funds (ETFs), artificial intelligence (AI), tokenization of real-world assets (RWA), and the altcoin market. Prior to this, she was a content writer for Binance, producing in-depth research reports on cryptocurrency trends, market analysis, decentralized finance (DeFi), digital asset regulations, blockchain, initial coin offerings (ICOs), and tokenomics. Bary also...
READ FULL BIO
Sponsored
Sponsored