The ongoing legal battle between Coinbase and the US Securities and Exchange Commission (SEC) has taken a new turn. Coinbase has filed a motion to dismiss the SEC’s complaint, arguing that the SEC has exceeded its legal jurisdiction.
The motion, filed on June 29, 2023, in the US District Court for the Southern District of New York, highlights Coinbase’s concerns about the SEC’s interpretation of securities laws. Coinbase argues that the SEC is applying securities laws to specific digital tokens in a manner that significantly deviates from established legal frameworks.
The SEC has sued Coinbase for allowing the trading of twelve digital tokens classified as securities without proper registration. Coinbase has challenged this assertion, arguing that the SEC is misapplying the Howey test, the Supreme Court precedent for determining whether an investment contract is a security.
Coinbase argues that the twelve tokens in question do not meet all four of these criteria. For example, Coinbase argues that the tokens are not investments of money because they are not purchased with the expectation of receiving a return.
Coinbase also argues that the SEC’s lawsuit is an abuse of process. The company points out that the SEC approved Coinbase’s registration statement in 2021, which allowed the company to publicly offer its shares to investors. Coinbase argues that this approval is inconsistent with the SEC’s current lawsuit, which alleges that Coinbase is violating securities laws.
The SEC has not yet filed a response to Coinbase’s motion to dismiss. The case is still in its early stages, and it is unclear how it will ultimately be resolved.
However, Coinbase’s motion to dismiss is a significant development in the case. It shows that Coinbase is not backing down from the SEC and is determined to defend its position. The outcome of this case could have a major impact on the cryptocurrency industry, as it could set a precedent for how securities laws are applied to digital assets.