In an ongoing legal skirmish between Coinbase, the prominent American cryptocurrency exchange, and the United States Securities and Exchange Commission (SEC), Coinbase has recently lodged a motion seeking the dismissal of the regulatory body’s complaint.
Presented as a legal instrument on Thursday, June 29, to the distinguished U.S. District Court for the Southern District of New York, Coinbase’s filing expressed profound reservations regarding the SEC’s subjective interpretation of securities laws, implying a trespass into territories beyond its legitimate jurisdiction.
This resolute move reaffirms Coinbase’s unwavering commitment to contest the SEC’s litigation efforts. The motion to dismiss underscores the contention that, even assuming the veracity of all allegations stated in the lawsuit, the plaintiff lacks a valid legal claim. With resounding conviction, Coinbase’s legal team articulated in the filing:
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“Even supposing the SEC were to espouse the correctness of its identification of the assets and services falling within the purview of its existing regulatory authority, this [legal] action must nevertheless be expunged on autonomous grounds for its transgressions against Coinbase’s due process rights, flagrantly epitomizing an exceptional abuse of process.”
Coinbase vehemently rebuts the SEC’s assertions and argues that the regulatory body has employed securities laws to encompass certain digital tokens in a manner that egregiously deviates from the preexisting legal frameworks. On June 29, Paul Grewal, Coinbase’s Chief Legal Officer, conveyed his disapproval of the SEC’s claims via a tweet, asserting that they “exceed the confines of established law” and should therefore be summarily dismissed.
Notably, the SEC’s definition of securities encompasses investment contracts, an interpretation previously elucidated by the Supreme Court in the Howey test. Under this test, investment contracts encapsulate transactions wherein individuals invest capital in a collective enterprise, anticipating primarily derived profits from the efforts of others.
