Coinbase has again filed for a dismissal of the securities and exchange commission (SEC)’s case against it. This is the second time the exchange has filed for a dismissal of the case. However this time, it says the SEC is out of bounds.
The first filing followed Ripple’s victory in court against the agency when it was ruled that the sale of XRP did not violate securities laws. Coinbase cited Ripple’s victory as a basis for dismissal of the SEC’s allegations against it.
The SEC filed allegations of securities laws violations against Coinbase in June this year. The agency alleged that Coinbase did not register as a security exchange despite allowing the trading of what the agency regards to be securities.
In a Tuesday filing by lawyers representing the company, Coinbase said the SEC had no business in its activities since they aren’t exactly security-related.
“Investment contracts grant the purchaser a contractual claim related to the future income, profits, or assets of a business enterprise. That is what makes them securities rather than just investments,” Coinbase said in a filing. “Because the SEC’s Complaint does not and cannot plead that the simple asset trades it identifies involve ongoing contractual obligations related to a business enterprise, Coinbase is entitled to judgment on the pleadings.”
The SEC considers any transaction in which someone expects their purchase to increase in value or if they part with capital, to be a security transaction. In its explanation, the exchange said this could give the agency authority over many things.
“Consider an artist who sells paintings over Etsy with a note that she is planning to exhibit her work in a gallery next month. Those who read the note might buy the paintings hoping the artist’s plans to increase her exposure will drive up the value of her work. In the SEC’s conception, each sale and resale of the paintings on Etsy would be a securities transaction,” Coinbase explained.
Coinbase Hopeful
In its filing on Tuesday, Coinbase also argued that the major questions doctrine – which states that if an agency wants to decide on an issue that has major national significance, it has to be supported by clear congressional authorization – does apply in its case with the SEC, despite critics saying it doesn’t.
Meanwhile, the judge in charge of the case, Judge Katherine Polk Failla recently fully dismissed a case regarding a class action lawsuit brought against Uniswap Labs, the Uniswap Foundation and investors Paradigm, Andreessen Horowitz and Union Square Ventures.
According to Failla, there was no need to “stretch” federal securities laws in the case, suggesting that it is for lawmakers to decide. Hopefully a similar verdict will come for Coinbase which considers the SEC’s actions to be overreaching.
Coinbase’s Fight for Crypto
Although Coinbase has been in court since June, it hasn’t only fought for itself, but for the entire crypto space. In its quest to ensure proper regulation for the industry which the SEC has not brought, it filed a case in court demanding that the SEC drafts regulation for the industry.
The exchange has also been lobbying lawmakers in the country to ensure that legislation is passed to support a regulatory framework for cryptocurrencies in the U.S.
So far, some progress has been achieved as lawmakers are already pushing for such legislation to provide for crypto regulation which is expected to bring clarity and facilitate the grwoth of the industry.
