By: Eliza Bennet
The US Securities and Exchange Commission (SEC) has formally requested a federal judge to reject Coinbase's appeal to dismiss the ongoing lawsuit. The SEC's stance is anchored in their belief that the cryptocurrencies listed on Coinbase's platform were investment contracts under the Howey Test and subsequently, subject to SEC regulation.
The SEC's rebuttal against Coinbase's claims manifested in an official court filing in New York. In the document, the SEC maintains that Coinbase was cognizant that the trade of these cryptocurrencies constituted carrying out securities transactions, a point they argue was clear in Coinbase's SEC filings. Paul Grewal, Coinbase legal chief, quickly took to Twitter to critique the SEC's response, asserting that the cryptocurrencies listed on the platform do not fall under securities and thus are not subject to SEC jurisdiction.
The unfolding dispute also brought the SEC's jurisdiction over the crypto market into question. Coinbase posited that unless specifically sanctioned by Congress, the SEC lacked authority within the cryptocurrency sphere. The SEC dissented this, arguing it has not assumed any new power than was already granted to it under federal securities laws.
Some industry experts claim the SEC's argument has noticeable gaps. Miles Jennings, a16z crypto's general counsel, tweeted that even if the court sided with SEC's main argument about investment contracts, the case should still fail due to the 'endless breadth' of the SEC's interpretation of an investment contract.
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