Coinbase argues it doesn’t trade securities, so the SEC’s lawsuit should be dismissed

Illustration by Alex Castro / The VergeCoinbase is asking a judge to dismiss the Securities and Exchange Commission’s lawsuit against it. In a motion filed on Friday, Coinbase maintains that it doesn’t trade securities, rendering the SEC’s arguments invalid....

Lynk Lynk
Aug 4, 2023 - 21:02
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Coinbase argues it doesn’t trade securities, so the SEC’s lawsuit should be dismissed

Coinbase is asking a judge to dismiss the Securities and Exchange Commission’s lawsuit against it. In a motion filed on Friday, Coinbase maintains that it doesn’t trade securities, rendering the SEC’s arguments invalid.

The SEC sued Coinbase in June, alleging that the crypto exchange broke securities laws by operating as an unregistered broker, exchange, and clearing agency. It also accused the company of selling unregistered securities through its staking-as-a-service program, which rewards users with crypto by participating in the proof-of-stake process on the blockchain.

However, Coinbase rejects the SEC’s arguments, claiming that the case “falls outside the agency’s delegated authority” because the platform doesn’t actually offer securities. Coinbase has long held this argument, with Paul Grewal, the company’s chief legal officer, writing last year, “Coinbase does not list securities. End of story.”

In a post announcing Coinbase’s motion to dismiss, Grewal claims that “the SEC has violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws,” adding that the “SEC has trampled the strict boundaries on its basic authority set by Congress.”

Those arguments still haven’t stopped the SEC from suing Binance, crypto influencer Richard Heart, and Tron founder Justin Sun for allegedly selling unregistered securities as well.