Coinbase Counters SEC Lawsuit: Highlights Inconsistencies and Defends Crypto Industry
Summary:
Coinbase, a cryptocurrency exchange, has responded to a lawsuit lodged by the SEC, leaning heavily on case law and arguing that the central issue is whether an investment contract requires a contractual obligation. Coinbase pointed out inconsistencies in the SEC's accusations and highlighted a recent legislative move by the House of Representatives that aims to curb the SEC's broad jurisdiction. Amid these developments, Coinbase continues proactive initiatives, such as the Stand with Crypto campaign, to safeguard the blockchain industry.
Coinbase is heavily relying on case law in its ongoing standoff with the U.S. Securities and Exchange Commission (SEC), drawing a unique inference, "the SEC strives to bypass the [Howey] test." On May 24, Coinbase lodged a memorandum supporting its interlocutory appeal - an appeal opposing a stand-alone verdict within an ongoing lawsuit. This mechanism is in answer to the SEC's counteraction to Coinbase's initial appeal request. The crypto exchange put forward its interlocutory appeal on April 12, opposing the March 27 verdict that pointed to sufficient evidence brought forth by the SEC to label Coinbase's staking program as non-compliant securities offering.
A point of paramount importance in the SEC lawsuit, according to Coinbase, is the necessity of a contractual obligation for an investment contract. In a memorandum countering Coinbase's original interlocutory appeal, the SEC maintained that no court mandated a post-sale contractual commitment for the implementation of Howey. Coinbase responded in its May 24 documentation by stressing that in the 78 years since the Howey test was initiated, no appellate court has recognized an investment contract without a post-sale contractual commitment. This argument emphasizes that the matter is suited for judicial evaluation rather than being an "application of established law," as stated by Coinbase. The crypto exchange also said that the SEC's accusations against Ripple in their ongoing lawsuit contrasted with those made against Coinbase. Furthermore, it pointed out recently passed legislation by the House of Representatives that would restrict the SEC's claimed broad jurisdiction.
In June 2023, the SEC brought a lawsuit against Coinbase, accusing the crypto exchange of violating securities legislations. In addition to its focus on the staking operation, the SEC classified 13 cryptocurrencies listed by Coinbase as securities. Even amid such allegations, Coinbase has been steadfast in not only defending its own reputation but also safeguarding the crypto industry's integrity. Following the SEC lawsuit, Coinbase initiated the Stand with Crypto campaign, which now includes a political action committee. Reports claim that 1 in 6 newly surfaced Base meme coins are deceptive, and an alarming 91% are vulnerable to potential risks.
Published At
5/24/2024 8:44:57 PM
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