Coinbase Once Again Slams SEC for Overstepping Boundaries
- Coinbase has once again asked the lawsuit filed by the SEC in June to be dismissed by a New York judge.
- It said that the SEC was out of bounds, adding that its authority is limited to securities transactions.
- The exchange said that by the currency SEC logic, it should be regulating markets in other sectors.
- The SEC sued Coinbase in June, stating that the exchange failed to register as a securities broker.
Coinbase, the largest crypto exchange in the United States by trading volume, has once again slammed the United States Securities and Exchange Commission (SEC), accusing the regulator of overstepping its boundaries with its lawsuit against the exchange.
The only publicly traded digital asset trading platform in the US claims that a New York judge should dismiss the lawsuit filed by the SEC in June. In a court filing on October 24, Coinbase stated that the agency was out of bounds and added that the agency’s authority is limited to securities transactions.
Interestingly, the SEC filed a lawsuit against Coinbase in June for not registering as a securities exchange, broker, and clearing agency. The Brian Armstrong-led company said that “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 further stated in the filing that “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.”
Interestingly, the leading exchange said that by the current logic of the SEC, it has the authority to regulate any investment contract where the buyer expects their purchase to increase in value or if they part with capital. However, Coinbase noted that, by this logic, numerous other items will also fall under the regulator’s purview.
“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 said.
After facing legal action from the SEC in the United States, Coinbase has decided to expand operations outside the country. The exchange recently obtained a Major Payment Institution (MPI) license from the Monetary Authority of Singapore. It also secured an Anti-Money Laundering (AML) compliance registration from the central bank of Spain.