- The SEC asserts that Coinbase was aware of the potential application of federal securities laws.
- Coinbase informed its shareholders about the possibility of assets traded on its platform being classified as securities.
- Despite providing detailed information, Coinbase faced charges from the SEC after its initial public offering, claims the exchange.
Recent developments in the Coinbase vs United States Securities and Exchange Commission include a response filed by the regulator to a claim made by the exchange. The SEC’s letter asserts that Coinbase knew how the federal security laws would apply to them, all along.
Earlier, Coinbase had argued that the US SEC doesn’t possess the authority to prosecute them as the asset trading on the platform is not classified as “investment contracts,” or securities.
However, on July 7, the regulator sent a letter to a district judge stating that Coinbase was aware of the potential application of federal securities laws to its activities. The letter revealed that Coinbase openly disclosed to its shareholders the chance of assets traded on its platform being categorized 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.
US SEC in us sec vs coinbase
Moreover, the SEC stated that Coinbase is a “multi-billion-dollar entity advised by sophisticated legal counsel” that is deliberately,” underestimating over “75 years of controlling law under Howey,” while experimenting with a self-made definition of investment contracts.
Alongside Coinbase’s claim against the SEC, it planned to file a motion for judgment and thus, notified the court on June 28. The crypto firm further quoted the SEC Chair Gary Gensler’s stand about US crypto regulatory authority in its letter. During Gesler’s testimony before Congress, he reportedly made statements suggesting that there is currently no market regulator overseeing crypto exchanges. He allegedly stated that only Congress has the power to grant authority for regulating crypto exchanges.
Moreover, Coinbase has highlighted the fact that, despite providing detailed information about its activities to both the SEC and the public, it faced charges from the SEC two years after its initial public offering.
