NEW YORK, June 29 (Reuters) – Coinbase, the
largest U.S. cryptocurrency platform, said it will ask a judge
to dismiss the U.S. Securities and Exchange Commission lawsuit
claiming it broke the law by failing to register its business.
In a letter filed just before midnight on Wednesday in
Manhattan federal court, Coinbase said the SEC has no authority
to pursue civil claims because assets trading on its platform
are not “investment contracts,” and thus not securities.
“The SEC can pursue its claims only if the tokens and
staking services it has identified are ‘securities,'” Coinbase
said. “They are not.”
Spokespeople for the SEC did not immediately respond to
requests for comment on Thursday.
The SEC sued Coinbase on June 6, saying it made billions of
dollars acting as a middleman including by trading at least 13
crypto assets, or tokens, such as Solana, Cardano and Polygon
that should have been registered as securities.
Coinbase was also sued over a “staking” program where it
pools crypto assets to support activity on the blockchain
network, in exchange for “rewards” it provides customers after
taking commissions for itself.
The lawsuit was filed one day after the SEC sued Binance,
the world’s largest cryptocurrency exchange, accusing it of
inflating trading volumes, mishandling customer funds and lying
about its operations.
SEC Chair Gary Gensler has been trying to assert
jurisdiction over the crypto industry, which he has said
undermined investor trust in the U.S. capital markets.
In a separate 177-page filing denying the SEC’s substantive
claims, Coinbase said it “welcomes regulation,” but that the
regulator was arbitrarily and without Congress’ permission
trying to fill the “regulatory gap” over crypto assets.
“Agency enforcement authority is important but not
boundless,” it said. “The SEC’s action here is beyond those
bounds and unlawful.”
Shares of Coinbase’s parent Coinbase Global rose $1.58, or
2.2%, to $72.33 in afternoon trading on the Nasdaq.
The case is SEC v Coinbase Inc et al, U.S. District Court,
Southern District of New York, No. 23-04738.
(Reporting by Jonathan Stempel in New York; Editing by Richard
Chang)
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