Coinbase Files Motion to Dismiss SEC Lawsuit, Citing Violation of Due Process

6:36 pm
August 4, 2023
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Cryptocurrency exchange Coinbase has filed a motion to dismiss a lawsuit brought against it by the US Securities and Exchange Commission (SEC) in June. The motion, filed on August 4, claims that the SEC violated due process, abused its discretion, and abandoned its previous interpretations of securities laws. Coinbase’s legal team referenced the recent SEC v. Ripple case, in which a judge ruled that XRP did not qualify as a security. Coinbase argues that the transactions in question do not meet the definition of “investment contracts” and that the SEC’s challenges to its staking program fail as a matter of law. The exchange is requesting the court to dismiss the case, arguing that the SEC’s enforcement action is punitive and represents an overreach of its authority granted by Congress.

The SEC filed the lawsuit against Coinbase on June 6, following a Wells notice the exchange received from the regulator. Coinbase has consistently denied the SEC’s allegations and announced on August 3 that it would be filing a motion to dismiss. The SEC is also pursuing enforcement actions against Binance and Hex founder Richard Heart. Recent legislation passed by US lawmakers could potentially restructure the commission’s authority over digital assets if it becomes law.

Summary

Coinbase has filed a motion to dismiss the SEC’s lawsuit, claiming violations of due process and an overreach of regulatory authority. The exchange argues that the transactions in question do not meet the definition of investment contracts and that the SEC’s challenges to its staking program fail as a matter of law. Coinbase has consistently denied the SEC’s allegations and is requesting the court to dismiss the case.

FAQ

What is the SEC’s lawsuit against Coinbase about?

The SEC’s lawsuit against Coinbase alleges that the exchange’s activities potentially violate securities laws.

What is Coinbase’s response to the lawsuit?

Coinbase has filed a motion to dismiss the lawsuit, claiming violations of due process and an overreach of regulatory authority.

What precedent does Coinbase’s legal team reference in their motion?

Coinbase’s legal team referenced the recent SEC v. Ripple case, in which a judge ruled that XRP did not qualify as a security.

What actions is the SEC taking against other entities?

The SEC is also pursuing enforcement actions against Binance and Hex founder Richard Heart.

Could recent legislation potentially impact the SEC’s authority over digital assets?

Legislation passed by US lawmakers could potentially restructure the SEC’s authority over digital assets if it becomes law.


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