Title: Coinbase Challenges SEC Lawsuit, Files Motion to Dismiss Allegations
In a recent development, cryptocurrency exchange Coinbase has submitted a motion to dismiss the Securities and Exchange Commission’s (SEC) lawsuit that was filed in June. The United States-based company claims that the SEC violated due process and exceeded its regulatory authority by asserting control over the exchange.
Coinbase, through its legal team, argues that the SEC’s enforcement action represents an overreach, citing the precedent set in the SEC v. Ripple case. They pointed out that a judge ruled that the XRP token did not qualify as a security under the commission’s existing regulations. Coinbase’s motion for judgment emphasizes that the 12 tokens in question in the SEC’s case do not meet the definition of “investment contracts” under the Howey test. Additionally, they dispute the allegation that the exchange was operating as an unregistered broker, stating that the Commission’s challenges to their staking program “fail as a matter of law.”
Seeking dismissal of the case, Coinbase contends that the SEC’s actions were punitive and surpass the authority granted by Congress. The exchange argues that the SEC disregarded previous interpretations of securities laws, leading to a violation of due process and an abuse of discretion.
The SEC filed the lawsuit against Coinbase on June 6, several months after the exchange received a notice of Wells from the federal regulator. As mentioned earlier, Coinbase firmly denies the SEC’s claims that its activities violate securities law and expressed its intention to file a motion to dismiss during an earnings conference call on August 3.
It is worth noting that the SEC has also taken legal action against Binance and Hex founder Richard Heart. Furthermore, US lawmakers have recently passed a bill that could potentially reshape the Commission’s authority concerning digital assets if it becomes law.
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