Coinbase accuses SEC of abuse of power

How does the Coinbase exchange work and what are its features?  Explains ForkLog
How does the Coinbase exchange work and what are its features?  Explains ForkLog

SEC went beyond its competence in relation to cryptocurrencies in the case against Coinbase. This is stated in the exchange’s response to the regulator’s lawsuit.

According to representatives of Coinbase, the assets listed in the claim are not investment contracts and, therefore, cannot be equated with securities.

Referring to the Howey test, the company clarified that cryptocurrencies in the secondary exchange market are not part of any agreements under which the sale of an asset tied to a contract is carried out. In addition, token issuers have no obligations to investors.

“Because such liabilities do not arise from Coinbase secondary market transactions, and because the value that Coinbase buyers derive from these transactions is associated with the things bought and sold and not with the businesses that created them, the transactions are not securities transactions.” the statement says.

The exchange once again pointed to the changed position of SEC Chairman Gary Gensler regarding the powers of the regulator between taking office in April 2021 and mid-2022.

“Even if the SEC were correct that the assets and services it identifies are within its scope of regulation, this action should be rejected on the independent basis that it violates Coinbase’s due process rights and constitutes gross abuse of process.” , added Coinbase.

The company recalled that over the years it has complied with all regulatory requirements and has repeatedly requested direct advice from the SEC on the enforcement of federal securities laws in relation to the digital asset industry.

In a separate filing, Coinbase claimed a violation of its due process rights and a possible violation of the Commission’s “substantive issues” doctrine. The company has asked for a 7-week timeline for its petition, the regulator’s objection, and its response to it.

Recall that on June 6, the SEC filed a civil lawsuit against Coinbase. The commission accused the exchange of an unregistered offer of securities in the form of a number of tokens.

The agency also targeted the Coinbase Earn staking program.

The exchange refused to change the business model due to the Commission’s lawsuit.

Found a mistake in the text? Select it and press CTRL+ENTER

ForkLog Newsletters: Keep your finger on the pulse of the bitcoin industry!


Leave a Reply