Coinbase Plans to Seek Dismissal of SEC Lawsuit in Legal Battle

Coinbase, the well-known cryptocurrency exchange, has announced its plans to file an order seeking the dismissal of the lawsuit brought against it by the Securities and Exchange Commission (SEC). The exchange’s Chief Legal Officer, Paul Grewal, expressed strong confidence in winning the legal battle during the company’s second-quarter 2023 earnings call on August 3.

The SEC filed the lawsuit against Coinbase on June 6, accusing the exchange of selling unregistered securities and operating as an unregistered securities exchange. In response, Coinbase intends to submit a motion on August 4, seeking a dismissal of the entire lawsuit.

According to Grewal, Coinbase’s argument will be based on several points. They will assert that the exchange did not list securities on its platform, the SEC lacks regulatory authority over crypto exchanges, and that the SEC did not indicate any requirement for registration when it declared Coinbase’s registration statement effective in April 2021. The legal brief outlining these arguments is expected to be fully submitted and considered by the court around the end of October.

Beyond the specific legal battle, Coinbase’s overall goal is to achieve regulatory clarity in the crypto space. Grewal emphasized that conflicting messages from different regulators have created uncertainty about the legal status of cryptocurrencies. For example, the statements made by SEC Chair Gary Gensler and Commodity Futures Trading Commission Chair Rostin Behnam regarding the status of Ether (ETH) have caused confusion in the industry. Behnam referred to ETH as a commodity, while Gensler categorized all cryptocurrencies except Bitcoin as securities.

Grewal pointed out that many of the existing laws applicable to the crypto industry were written long before the internet’s existence. Coinbase aims to navigate this complex regulatory landscape and advocate for clear guidelines to ensure compliance and stability in the market.

Regardless of the outcome of the current legal proceedings, Coinbase views regulatory clarity as the ultimate victory. Achieving clarity would pave the way for a more transparent and stable crypto environment, benefiting the industry as a whole.

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