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In an ongoing legal battle between Coinbase and the US Securities and Exchange Commission (SEC), the US-based cryptocurrency exchange has filed a motion to dismiss the SEC complaint.
In a legal document filed on Thursday, June 29 in the U.S. District Court for the Southern District of New York, Coinbase raised concerns about the SEC’s interpretation of securities laws, suggesting the agency is going beyond its legal authority.
The move highlights Coinbase’s determination to challenge the SEC lawsuit. The motion to dismiss argues that even if all the allegations in the lawsuit are true, the plaintiff has no legitimate legal claim. Coinbase’s legal team said in a statement:
“Even if the SEC were correct that the assets and services it identifies are within its existing regulatory authority, this [юридическое] the action must be rejected on independent grounds as it violates Coinbase’s due process rights and constitutes gross abuse of process.”
The SEC lawsuit alleged that Coinbase facilitated unregistered trading in 12 digital tokens that were considered securities.
The company disputed this claim and argued that the SEC has applied securities laws to certain digital tokens in ways that deviate significantly from existing legal frameworks. Paul Grewal, Coinbase General Counsel, tweeted on June 29 that the SEC’s demands “go well beyond current legislation” and should therefore be rejected.
Today @coinbase filed our answer and notice of intent to file a motion to dismiss the @SECGov case against us. You can read our response for yourself – our arguments speak for themselves. 1/2 https://t.co/Ld2ZEejhyM
— paulgrewal.eth (@iampaulgrewal) June 29, 2023
The SEC’s definition of security includes investment contracts, which were interpreted by the Supreme Court in the Howey test to include transactions in which people invest money in a common enterprise and expect to profit primarily from the efforts of others. In its lawsuit, the SEC named 12 crypto tokens as securities, including Solana SOL, Cardano (ADA), Polygon (MATIC), The Sandbox (SAND), Flow (FLOW), Internet Computer (ICP), Near (NEAR), and Dash. .(Dashcoin).
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The exchange’s lawyers also argued that in 2021, the SEC declared Coinbase’s fee-based registration statement effective, allowing the company to sell its shares to investors when it goes public.
The approval followed an extensive review process that spanned several months and included extensive discussions with Coinbase. This allowed Coinbase to trade more than 240 tokens on its spot exchange, including six of the 12 tokens currently in dispute.