The United States Securities and Exchange Commission (SEC) Responds to Coinbase’s Jurisdiction Claims
The SEC has filed a response to Coinbase’s claims challenging the regulator’s jurisdiction over the prosecution of the cryptocurrency exchange.
In a letter dated July 7 and addressed to a district judge, the SEC stated that Coinbase was aware of the potential applicability of federal securities laws to its operations. The exchange openly communicated to its shareholders about the possibility of assets traded on its platform being classified as securities.
“Since becoming a public company, Coinbase has repeatedly informed its shareholders of the risk that the crypto assets traded on its platform could be deemed securities and therefore that its conduct could violate the federal securities laws,” reads the regulator’s response.
According to the SEC, Coinbase, as a “multi-billion-dollar entity advised by sophisticated legal counsel,” has deliberately disregarded decades of established law, such as the Howey test, in an attempt to establish its own criteria for determining what constitutes an investment contract.
Response to Coinbase’s Previous Filing
The SEC’s letter is a response to Coinbase’s previous filing. On June 28, the exchange informed the court of its intention to file a motion for judgment. A motion for judgment is typically used when a party believes that there is no genuine dispute about material facts in a case, according to Cornell University.
In its previous filing, Coinbase referenced SEC Chair Gary Gensler’s appearance before Congress, where he allegedly stated that there is no market regulator overseeing crypto exchanges and that only Congress has the authority to regulate them. Coinbase also highlighted that the SEC filed charges against them two years after their public listing, despite having detailed knowledge of their activities, which were made public.
Speaking with Cointelegraph, corporate and securities lawyer Roland Chase explained that the SEC’s role is limited to reviewing public listing documents and providing comments to improve a company’s disclosure to potential investors. He clarified that federal securities laws governing the “going public” process are disclosure-based and the SEC does not have the authority to deny a company’s listing based solely on its opinion of the investment.
Legal Proceedings and Conference
The SEC charged Coinbase on June 6 for allegedly offering unregistered securities since 2019. A pre-motion conference for the case is scheduled for July 13 at 2:00 pm UTC.
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