Coinbase has formally lodged a last plea with the court amidst its long-standing legal clash against the US Securities and Exchange Commission (SEC). The petition challenges the notion that tokens inherently conform to the criteria of an investment agreement, asserting that the SEC has gone beyond its jurisdictional limits.
On October 24, the company submitted a legal document to Judge Katherine Polk Failla of the Southern District of New York, expressing its stance in the ongoing case. This move was prompted by the regulator’s claims, which had been outlined in a comprehensive 40-page response filed earlier this month, as indicated in court records.
Coinbase voiced vehement disapproval towards the SEC, contending that their expansive interpretation of securities was baseless. The platform maintained that the SEC aimed to exert control over virtually all investments, a jurisdiction that, as per Coinbase, should solely lie with Congress by the major questions doctrine, as it is constitutionally mandated.
Coinbase has challenged the notion that the regulator should have jurisdiction over cryptocurrency listings. The US crypto exchange made its case to a federal judge in its recent plea to have the lawsuit, filed against it in June, dismissed.
Judge Failla’s dismissal is being requested in the filing, as it aims to halt the SEC’s case in its tracks. The motion for judgment on the pleadings seeks a thorough examination by the court to determine if a legal decision can be reached assuming the veracity of all facts presented in the SEC’s complaint.
Coinbase Awaits Judge Failla’s Decision in Ongoing SEC Case, Trial Date Possible in 2025
Judge Failla has the authority to summon both Coinbase and the SEC to present their arguments orally in the courtroom. Following this, she retains the prerogative to render a verdict about the case by either choosing to dismiss it outright or opting to initiate a jury trial.
Assuming Judge Failla remains unconvinced to dismiss the case, Coinbase is determined to hasten the legal proceedings and proceed to trial with utmost speed, as affirmed by an individual familiar with the situation. They further noted that the phase of discovery, wherein both parties share evidence, can span a year, potentially delaying the trial until at least the first quarter of 2025.
Despite her involvement in crypto-related cases throughout the year, Judge Failla has consistently delivered rulings supporting prominent DeFi industry players such as Uniswap and Ripple. Her noteworthy examination of the operational mechanisms behind DeFi exchanges utilizing liquidity pools earlier this year resulted in a July verdict declaring that Ripple (XRP) does not inherently qualify as a security.
Coinbase’s Chief Legal Officer, Paul Grewal, recently addressed the SEC’s resistance to their motion for judgment in an X post on October 24th. Grewal boldly asserted his company’s dominion over all investments, challenging the limiting interpretation of the terms of security and contract within the statutes.
In response to these allegations, he rebuts by asserting that the SEC’s definitions lack any restrictive purpose and that this understanding has never held legal standing, nor does it currently hold legal validity.
SEC Continues its Pursuit of Legal Action Against Coinbase for Alleged Breach of Securities Laws
Coinbase has submitted a fresh document in reply to the SEC’s counter-statement issued on October 3, wherein the SEC recommended the court reject Coinbase’s request for dismissal. The initial lawsuit, filed against Coinbase and Binance in early June, saw the SEC accusing the exchange of breaching US securities regulations by including various tokens as securities without seeking regulatory registration.
Coinbase has been on the wrong end of accusations from the SEC, whereby the regulator has accused the platform of wrongdoing. The allegations comprise unauthorized trading in securities and operating as an unregistered exchange, broker, and clearinghouse. The complaint filed by the securities regulator showcases a list of 13 tokens that they deem to be securities, prominently featuring Solana’s (SOL) token and Cardano’s (ADA) coin.
Coinbase has found itself in hot water as the SEC lodges accusations of providing and vending unregistered securities via its staking program. The program in question permits investors to stake a quintet of distinct tokens, all of which the SEC argues firmly fall under the umbrella of investment contracts.
Coinbase’s bold and decisive action in August involved actively pursuing the dismissal of the lawsuit they were facing. Their underlying motivation was to drive US regulators towards creating a comprehensive framework of concise and comprehensible regulations, applicable to all participants in the industry.
In a bid to have the case dismissed, Coinbase took a formal step in August by filing a court motion, urging Judge Failla. Their argument centered around the SEC’s purported violations of due process, abuse of discretion, and departure from its prior interpretations of securities laws.
On October 3, the SEC retaliated against Coinbase’s attempt to shift focus away from its weak legal arguments by accusing the company of blaming the SEC for its ongoing legal predicament.
Despite Coinbase’s listings, the SEC persisted in its belief that various cryptocurrencies were classified as investment contracts based on the Howey test. The SEC relies heavily on the Howey Test, which asserts that particular tokens can be considered securities if they fulfill the conditions of investing money in a shared endeavor with a reasonable expectation of profits derived from the efforts of third parties.
Frequently Asked Questions:
In its legal document against the SEC, Coinbase asserts what crucial point as its main argument?
Coinbase contends that tokens should not be inherently classified as an investment contract, maintaining that the SEC’s regulatory reach has been exceeded.
Which court received the legal brief from Coinbase, and who was the intended recipient of the document?
Coinbase has submitted its legal document to the Southern District of New York, specifically directing it toward the esteemed Judge Katherine Polk Failla.
Coinbase’s motivation behind seeking an early dismissal of the SEC’s case remains elusive.
Coinbase aims to swiftly accelerate the legal process and potentially evade a protracted trial by requesting a dismissal. Their contention lies in the assertion that the SEC’s lawsuit lacks grounds for continuation, given the facts expounded in their complaint.
When the case will be dismissed or how long will the legal proceedings last?
However, if the case does not get dismissed, discovery, where both sides disclose information, can last as long as a year. Such an extension might therefore postpone the trial until the beginning of the first quarter in 2025.
What role does Judge Failla play in cases related to cryptocurrency and why is it important?
Judge Failla’s past rulings have consistently sided with influential players in the DeFi sector, notably Uniswap and Ripple. Additionally, her proactivity in handling legal matters involving cryptocurrencies suggests that her involvement in Coinbase’s case could have consequential implications.
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