Coinbase Exchange is currently facing a lawsuit from the Securities and Exchange Commission. The lawsuit was initiated on 6th June alleging the exchange of dealing in unregistered securities. Coinbase stated the past alluding to the possibility of having to leave the region on account of regulatory troubles.
However, the exchange has re-evaluated its positions regarding the matter. To this effect, Coinbase’s CEO has maintained that the exchange intends to stay in the country.
Coinbase CEO, Brain Armstrong has recently stated to ascertain that the idea of leaving the nation is not in the realm of possibility. He shared the stance of the company on 4th August during a time when the public limited enterprise is dealing with SEC action against staking services.
It is important to note that staking is an option to earn yields using cryptocurrencies. Coinbase CEO has maintained that there are no emergency plans for the entity to fold operations in the region.
Coinbase Lawyers File a Motion to Dismiss SEC Lawsuit
Coinbase legal team has been making strides in the court in its proceedings concerning the SEC lawsuit. The defense has reportedly filed a motion in the court to dismiss the lawsuit on 4th August citing that the federal agency has disregarded due process, overlooked secrecy, and based its allegations on subjective interpretation of the security laws.
The outcome of the Coinbase lawsuit can make an impact on other similar cases in the country. Coinbase legal team has submitted a series of arguments in their motion to dismiss the SEC lawsuit.
Recently, Coinbase CLO Paul Grewal has cited the Ripple case ruling by the court as a defense motion. Courts have ordained that XRP sales on secondary exchanges do not constitute unregistered securities. This ruling has been cited by various crypto enterprises in addition to Coinbase.
On the other hand, Coinbase’s CEO has reassured the stakeholders regarding its 100% commitment towards the HQ region for the long term. Coinbase is a listed company in addition to being a crypto trading platform. The firm has aired plans to launch an international exchange wing as well.
Coinbase CLO has recently argued in court that the exchange does not offer investment contracts. On the contrary, the defense maintained that its dealing with cryptocurrencies falls into the realm of baseball card dealing rather than securities. Based on these arguments, the defense team of Coinbase has asked the judge to dismiss the lawsuit by SEC.
Meanwhile, the public limited enterprise has posted its Q2 earnings reports citing the lowest revenue levels in three years. The legal team of Coinbase has argued that people invest in baseball cards with an expectation of value appreciation.
However, baseball cards are not classified as securities. At the same time, the exchange platform maintained that for its secondary markets, no investments are paired with returns in the future.
The exchange likened the listing of cryptocurrencies to asset sales like real estate. Thus far, the courts have not set a defined legal precedent for qualifying cryptocurrencies as securities.
Judge Analia Torres who presided over the Ripple Labs case and Judge Jed Rekoff who oversaw Terraform Labs case have differences in their opinions on the matter. However, they agree that in their particular lawsuits, the tried crypto projects were not securities.