World Crypto Global
- Written by: Solomon Oladipupo
- Thu, 29 Jun 2023
- Israel
Cryptocurrency exchange Coinbase has filed its first legal response to the Securities and Exchange Commission's (SEC) allegations, saying the claims “lack all merit.” It also argued that were SEC’s assertion of regulatory power over its cryptocurrency services correct, the watchdog’s action violates its “due process rights and constitutes an extraordinary abuse of process.”Coinbase Slams SEC over ‘Securities’ ClaimsIn early June, the SEC filed a lawsuit against Coinbase, alleging that the largest crypto exchange in the United States, is operating with an unauthorized trading platform and offers unregistered securities. The financial watchdog also accused Coinbase of running a digital asset staking-as-a-service programme without permission. However, in its 177-page-long response submitted to the district court in New York yesterday (Wednesday), Coinbase said it is not and has never been a securities exchange, broker or clearing agency. It also argued that cryptocurrencies traded on its platform fall outside the SEC’s authority because they are not ‘investment contracts’ or assets pooled from investors to engage in businesses and pay them with profits. Without this obligation, Coinbase’s listed crypto are not ‘securities’ but ‘just an asset sale,’ the exchange contended.Today @coinbase filed our answer and notice of intent to file a motion to dismiss the @SECGov case against us. You can read our response for yourself – our arguments speak for themselves. 1/2 https://t.co/Ld2ZEejhyM— paulgrewal.eth (@iampaulgrewal) June 29, 2023To buttress its argument that assets listed on its platform are not securities, Coinbase referenced a June 2018 speech by Bill Hinman, the former Director of the SEC’s Division of Corporation Finance. In the speech, Hinman said a token all by itself is not a security and the sales of Ether, the second largest cryptocurrency after Bitcoin, were not securities transactions.More Defence from CoinbaseFurthermore, Coinbase, while expanding on its argument that the SEC has no legal power to supervise its business, pointed to SEC Chair Gary Gensler’s testimony before the US Congress in May 2021. During the testimony, Gensler said crypto exchanges lacked a regulatory framework and market regulator.Meanwhile, the SEC in its allegations named 12 cryptocurrencies offered by Coinbase, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Sandbox (SAND) and Axie Infinity (AXS), as tokens. However, Coinbase in the filing noted that six of the named tokens were already trading on its platform as of April 2021 when SEC accepted its registration statement.The exchange said it successfully registered with the securities regulator after “years of discussions” and “a months-long process of extensive review.”“Coinbase had opened its business to the SEC, explaining its listing of digital assets, provision of trading and staking services, and self-custody wallet software — core aspects of Coinbase’s operations, then as now,” the exchange explained.Despite these developments, Coinbase said it repeatedly continued to seek engagement with the SEC and even petitioned the regulator in July last year to explain what assets it considered securities. Earlier this month, after the exchange asked a federal court to compel the regulator to respond, the SEC said it had not decided on what action to take with regard to the petition, Finance Magnates reported.No, seriously— what’s it gonna take? https://t.co/rpiaSsSYYo— paulgrewal.eth (@iampaulgrewal) June 28, 2023Other pages in Coinbase’s court filing provided the basis for Coinbase’s opposition to the SEC’s allegations. The exchange’s clap back comes in the wake of the securities watchdog’s heightened regulatory crackdown on crypto exchanges in the United States.AvaTrade's veteran joins GKFX; Nasdaq welcomes 60 IPOs; read today's news nuggets. This article was written by Solomon Oladipupo at www.financemagnates.com.
