SEC vs Coinbase Case to Take Place on July 13

3:52 am
July 2, 2023
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In their defense against the Securities and Exchange Commission (SEC), Coinbase argued that many of the tokens mentioned by the SEC are beyond the Commission’s jurisdiction.

The highly anticipated legal battle between cryptocurrency exchange Coinbase (NASDAQ: COIN) and the US Securities and Exchange Commission (SEC) has been scheduled for July 13. Coinbase is one of many crypto companies currently under scrutiny by the US financial regulator. The SEC alleges that Coinbase has been operating its crypto asset trading platform without proper registration as a national securities exchange, broker, and clearing agency. Additionally, it accuses the company of failing to register its staking-as-a-service program. The charges date back to 2019, claiming that Coinbase has unlawfully made profits.

SEC and Coinbase Set for July 13

The date was changed to July following Coinbase’s defense strategy, which involved submitting its initial response 40 days before the August 7 deadline. Coinbase employed a “creative” defense tactic, resulting in the July court date with the SEC.

According to the rules, the SEC must file a response to Coinbase after the crypto company’s strategic defense. While the expected response date was initially July 3, the SEC requested an extension due to the Independence Day holiday on July 4. The court granted the request. Additionally, the pre-trial conference, originally scheduled for August 24, will now be a pre-motion conference taking place on July 1. During a pre-motion conference, the presiding judge and attorneys evaluate the necessary steps to move the case to trial and set dates for specific tasks.

In Coinbase’s defense, which led to a new hearing date in July, the exchange argued that many of the tokens highlighted by the SEC in their allegations are outside the Commission’s jurisdiction. The company’s counsel stated:

“Coinbase has responded to the SEC’s Complaint with several defenses, including that this action violates due process and constitutes an abuse of discretion. But there is a more fundamental problem with the SEC’s case – one that the Chair recognized two years ago and that entitles Coinbase to judgment on the pleadings now: The subject matter falls outside the SEC’s authority.”

Coinbase’s Defense

The exchange further contended that the regulator could only proceed if the transactions involving the digital assets and services mentioned in the Complaint are considered “investment contracts,” making them “securities” under the Securities Act and the Exchange Act. Coinbase added:

“Because as a matter of law none of them are, the claims must be dismissed.”

MetaLawman, a lawyer and legal commentator on Twitter, compared Coinbase’s strategy of submitting its response 40 days earlier to a typical “creative strategy”. He explained that “Coinbase appears to be using this creative strategy to get documents helpful to its cause in front of the Judge through the Answer”.

Summary:

The legal battle between Coinbase and the SEC has been scheduled for July 13. The SEC alleges that Coinbase has operated its crypto asset trading platform without proper registration, and Coinbase argues that many of the tokens mentioned by the SEC are beyond the Commission’s jurisdiction.

FAQ:

What is the SEC vs Coinbase case about?

The SEC alleges that Coinbase has been operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. The SEC also claims that Coinbase has not registered its staking-as-a-service program.

When is the court date for the SEC vs Coinbase case?

The court date is scheduled for July 13.

What defense strategy did Coinbase employ?

Coinbase submitted its initial response 40 days before the August 7 deadline, resulting in the July court date. This was a “creative” defense tactic.

What did Coinbase argue in its defense?

Coinbase argued that many of the tokens mentioned by the SEC in their allegations are outside the Commission’s jurisdiction. Coinbase also stated that the transactions in question are not “investment contracts” and therefore not “securities” under the Securities Act and the Exchange Act.


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