Coinbase, one of the major cryptocurrency exchanges in the United States, has launched a firm rebuttal to the U.S. Securities and Exchange Commission (SEC).
The crypto heavyweight filed an answer and a notice of intent to file a motion to dismiss the SEC’s case, displaying its determination to fight back.
This new development underlines the tech firm’s resolve to combat the SEC’s lawsuit, contending that even if all the allegations are true, they still don’t result in a valid legal claim. The company’s legal team stated;
“Even if the SEC were correct that the assets and services it identifies are within the scope of its existing regulatory authority, this [legal] action must be dismissed on independent grounds that it violates Coinbase’s due process rights and constitutes an extraordinary abuse of process.”
An invitation for dialogue
Coinbase’s Chief Legal Officer, Paul Grewal, additionally took to Twitter to express the company’s standpoint, emphasizing that the SEC’s allegations exceed the boundaries of current law and must be dismissed. The legal officer reiterated Coinbase’s willingness to engage in dialogue with regulators, including the SEC, asserting that new legislation and rulemaking are appropriate for regulating the fast-growing crypto industry.
We welcome dialogue any time with any regulator, including the SEC, and believe new legislation and rulemaking is the right path forward. But the claims in this case go far beyond existing law – and should be dismissed. 2/2 https://t.co/3CID7vYURP
— paulgrewal.eth (@iampaulgrewal) June 29, 2023
Commendations and criticisms
Coinbase insisted that the SEC’s claims overstepped the confines of the existing legal framework, a statement that garnered significant attention from the crypto community.
Brad Nickel, a high-profile crypto influencer, praised Coinbase’s filing. He admired the simplicity and articulacy of the legal arguments, suggesting that even individuals unfamiliar with legal proceedings could easily understand the contents. Nickel also noted the key arguments made by Coinbase, stating that the assets under consideration did not originally qualify as securities and did not meet the criteria for an investment contract.
I rushed through 1st part of this, but in all my years of reading legal docs, the prose in this @Coinbase filing for dismissal is a thing of beauty.
Even if you've never read a legal doc, you will get it.
Go read it.
Coinbase is not messing around either:
These are not… https://t.co/Bw5tCb41L1
— Brad Nickel – Host: Mission DeFi & DeFi Lunch (@b05crypto) June 29, 2023
In his critique, Nickel highlighted SEC Chairman Gary Gensler’s statement from 2021, acknowledging his lack of authority unless Congress intervenes while noting that no congressional action has yet been taken.
The countdown begins
According to a recent court order, the SEC will present its response to Coinbase’s defense on July 13. The hearing is now scheduled much sooner than expected due to a “creative” defense tactic employed by Coinbase, which submitted its first response 40 days ahead of the August 7 deadline.
The SEC had until July 3 to respond to Coinbase’s defense but requested a three-business-day extension due to the July 4 holiday weekend, which the court granted. Additionally, the court moved the pre-trial conference to a pre-motion conference, advancing it to July 13 at 14:00 UTC.
The challenge ahead
In response to the SEC’s complaint, Coinbase has argued that many of the tokens highlighted in the SEC’s case fall outside the Commission’s jurisdiction. The recent developments have stirred a significant buzz in both regulatory and crypto circles, as all eyes are set on the upcoming hearing. The ripple effects of this clash between a crypto giant and the regulatory body may shape the future of crypto regulation in the United States.
and then