Coinbase Global on Friday asked a judge to end the US Securities and Exchange Commission's lawsuit accusing the world's largest publicly traded cryptocurrency exchange of violating federal securities laws.
In a filing in federal court in Manhattan, Coinbase said the
SEC had no authority to pursue its lawsuit because the digital assets and
services it objected to did not qualify as securities, and said the agency has
overreached.
"Our core argument is simple - we do not offer
'investment contracts' as that term has been construed by decades of Supreme
Court and other binding precedent," Coinbase Chief Legal Officer Paul
Grewal said in a post on X, formerly Twitter.
A spokesperson for the SEC declined to comment beyond their
public filings.
Coinbase was sued by the SEC in June, and accused of
operating illegally as a national securities exchange, broker, and clearing
agency without registering with the regulator.
Growing friction between the crypto sector and the top US
markets regulator has escalated amid a series of lawsuits the SEC has filed
against the world's largest crypto platforms.
The SEC has said the platforms needed to register and
operate in a manner akin to those dealing in stocks or bonds, while the crypto
sector says that new legislation is needed. Firms are closely watching the
litigation between the SEC and Coinbase, with some onlookers deeming it an
"existential" clash.
In the last month, two federal judges in Manhattan diverged,
in SEC lawsuits against crypto firms Ripple Labs and Terraform, over whether
the regulator overstepped its authority by trying to regulate the sector.
Coinbase leaned on the recent Ripple matter in Friday's
filing, noting the SEC's lawsuit hinges on the type of transactions that the
judge deemed outside of the regulator's jurisdiction.
Shares of Coinbase fell 3.8 percent on Friday.
© Reuters
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