- The SEC refuted Coinbase‘s allegations against it
- He dismissed that he had no regulatory authority to sue them
- He assured that the exchange violated the laws knowing that it was committing illegal acts
- The regulator maintains that the exchange-traded unregistered securities
The dispute between Coinbase and the US Securities and Exchange Commission (SEC) continues in court, and in a new filing with the court, the regulator assured that the exchange violated the laws currently in force knowing that it would be incurring faults when offering their products and services.
Violations under full knowledge
This was stated by the SEC in a presentation published yesterday, in which it refuted the argument presented by Coinbase by alleging that the agency did not have sufficient jurisdiction to sue them. The regulator reiterated that it would oppose any motion for trial filed by the exchange, asking the court to reject the idea that the complaint violated due process and regulatory jurisdiction.
In the filing, the SEC alleges:
Coinbase, a multibillion-dollar entity guided by sophisticated legal counsel, argues that it did not know its actions carried the risk of violating federal securities laws, and suggests that by approving Coinbase’s 2021 registration statement, the SEC confirmed the legality of its claims. commercial activities… then and forever.
To this, he adds that Coinbase had previously relied on the legal framework promulgated by the US Supreme Court. to determine whether certain cryptocurrencies met the requirements of federal securities laws, while “discouraging” issuers of digital assets from making any statements implying that their digital currency could be considered a security:
“These actions clearly show that Coinbase understood that securities laws might apply to its conduct and knew what rules to consider when assessing the legality of its actions, but nevertheless made a calculated decision to take this risk in the name of growing its business.” the agency said.
An equivocal premise
On the other hand, the agency appealed the statements made by the Coinbase team when rejecting the motion for judgment, where they indicated that they were not offering investment contracts.
The idea of the SEC is that even if the traditional process has not been done, some of the products and services offered by Coinbase do qualify as investment contracts as established by the Howey Test. Therefore, the “presentation of a formal contract” is not necessary to trade securities, nor are they exempt from the regulations if these assets are traded in secondary markets.
Keep in mind that Coinbase tried to dismiss the SEC‘s complaint by claiming that its products did not qualify as unregistered securities or investment contracts, but the agency reiterates that a formal contract is not necessary for an asset to meet the Howey Test, and that Transactions in secondary markets (such as cryptocurrency) may violate federal securities laws.
Coinbase continues to put up a fight
The dispute between Coinbase and the SEC is adding more and more complaints and allegations. While the exchange tries to dismiss the regulator’s complaints, the latter appeals to each of the appeals filed in court to confirm the presence of violations of the laws.
Let’s remember that the SEC publicly sued Coinbase, accusing it mainly of two things: First, operating as an unregistered exchange, and second, trading unregistered securities through the products and services offered.
In addition to this process, Coinbase took the SEC to court to demand more regulatory clarity regarding cryptocurrency trading. However, despite the fact that the judge has issued rulings in favor of the exchange, the government agency insists that the current laws are clear and specific enough to set the tone for companies that trade these assets.
For now, the next chapter in the dispute between Coinbase and the SEC will take place on July 13, when the exchange will be able to appeal these latest statements made by the securities regulator.
