The largest U.S. cryptocurrency platform, Coinbase (COIN.O), will urge a judge to dismiss the SEC case alleging it broke the law by neglecting to register its business.
Coinbase argued the SEC has no authority to pursue civil claims because assets transacted on its platform are not “investment contracts,” and thus not securities.
“The SEC can pursue its claims only if the tokens and staking services it has identified are’securities,'” Coinbase added. “They are not.”
SEC spokespersons did not reply to Thursday’s calls for comment.
On June 6, the SEC accused Coinbase of making billions of dollars as a middleman, trading at least 13 crypto assets, or tokens, like Solana, Cardano, and Polygon, which should have been securities.
Coinbase was also sued over its “staking” scheme, which pools crypto assets to boost blockchain activity in exchange for “rewards” for clients after taking commissions.
One day after, the SEC sued Binance, the world’s largest cryptocurrency exchange, for exaggerating trading volumes, mishandling customer cash, and lying about its operations.
SEC Chair Gary Gensler claims the crypto business undermines investor faith in U.S. financial markets.
In a second 177-page document, Coinbase said it “welcomes regulation,” but that the SEC was arbitrarily and without Congress’ consent trying to fill the “regulatory gap” over crypto assets.
“Agency enforcement authority is important but not boundless,” it stated. “The SEC’s action here is beyond those bounds and unlawful.”
Coinbase Global’s Nasdaq shares climbed $1.58, or 2.2%, to $72.33 in midday trading.
SEC v Coinbase Inc et al., U.S. District Court, Southern District of New York, 23-04738.
