Coinbase, the cryptocurrency exchange, has issued its final plea to dismiss a lawsuit filed by the United States Securities and Exchange Commission (SEC), asserting that the SEC exceeded its jurisdiction by classifying cryptocurrencies listed on the platform as securities.
In a legal filing made on October 24 in a New York District Court, Coinbase criticized the SEC’s approach, contending that the SEC’s definition of what constitutes a security was overly broad. The exchange argued that the cryptocurrencies it lists should not be subject to the SEC’s regulatory oversight.
Coinbase stated, “The SEC’s authority is limited to securities transactions. Not every financial transaction with the expectation of gain qualifies as a security, and trades conducted on Coinbase are considered securities transactions only if they involve ‘investment contracts.’ The transactions in question fall outside this category.”
Furthermore, Coinbase alleged that the SEC had embarked on a “radical expansion of its own authority,” attempting to claim jurisdiction “over nearly all investment activity,” which, according to Coinbase, is a prerogative reserved for Congress, as per the major questions doctrine.
On October 24, Coinbase’s Chief Legal Officer, Paul Grewal, reiterated these claims in a post on X, emphasizing that the SEC’s definitions lacked any constraining effect.
Coinbase’s recent legal filing was prompted by the SEC’s response on October 3, in which the SEC urged the court to reject Coinbase’s motion to dismiss. The SEC maintained its stance that various cryptocurrencies listed on Coinbase should be considered investment contracts under the Howey test.
The SEC initiated legal action against Coinbase on June 6, alleging that the exchange had violated U.S. securities laws by listing certain tokens as securities without registering with the regulatory body.
On June 29, Coinbase filed a motion for judgment, arguing that the SEC had been abusing its authority and infringing on Coinbase’s due process rights.
Judge Katherine Polk Failla, presiding over the case, may call upon Coinbase and the SEC to present oral arguments in court before issuing a judgment, dismissing the case, or deciding to proceed with a jury trial.
