The United States Securities and Exchange Commission (SEC) has urged the US District Court to deny cryptocurrency exchange Coinbase efforts to dismiss its lawsuit against the crypto exchange.
The Motion hinges on whether Coinbase intermediated transactions involving investment contracts—thus securities. It did, the SEC argues.
SEC Reiterates Key Arguments Against Coinbase In Response
In a recent court filing, the SEC opposed Coinbase’s plea to the US District Court for a complete dismissal of the lawsuit between the regulatory body and the exchange.
On June 29, Coinbase submitted a court request for the dismissal of the SEC’s legal action against them. Coinbase argued that the SEC has not successfully identified transactions involving the purchase and sale of securities. This highlights the ongoing ambiguity regarding what qualifies as a security with crypto.
In the filing, the SEC restates that Coinbase’s staking rewards constitute investment profits. However, Coinbase maintains that it is just “payments for putting crypto assets to work.”
Furthermore, it accuses Coinbase of promoting the staking program as an investment opportunity through its marketing materials:
“In other words, Coinbase ‘promoted’ the Staking Program “as an investment or as a means whereby participants could pool … their money and [Coinbase]’s contribution in a meaningful way.”
Meanwhile, the SEC once more asserted its stance that the exchange’s wallet application functions as an unregistered broker.
However, it emphasized that aside from the argument that cryptos are not securities, there are no other justifications.
“Coinbase actively solicits investors (on its website, blog, and social media) to use Wallet’s trading features, which compare prices across different third-party trading platforms, and takes and routes customers’ orders in crypto asset securities to those platforms.”
Coinbase CEO Calls for Regulatory Clarity Amid Legal Action
On June 6, the SEC took legal action against Coinbase, merely a day after initiating a comparable lawsuit against the world’s largest cryptocurrency exchange, Binance.
On the week of the filing, Coinbase witnessed a 28% drop in its stock price.
However, Brian Armstrong, the CEO of Coinbase, has voiced strong criticism regarding the US approach to crypto in recent times.
Most recently, his push for regulatory clarity in the US was made apparent through his political campaign “Stand with Crypto.”
Over 50 crypto founders support this campaign, which aims to advocate for regulations favorable to the industry. Its goal is to ensure that the US economy doesn’t miss out on the potential growth of the crypto sector in the years ahead.
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