Coinbase Seeks Dismissal of SEC Lawsuit, Arguing Tokens are Not Investment Contracts

Cryptocurrency exchange Coinbase has asked a New York federal court to dismiss a lawsuit by the Securities and Exchange Commission (SEC) that accuses the company of offering unregistered securities. Coinbase argues that the digital assets it lists for trading, such as Solana and Cardano, are not “investment contracts” and therefore do not fall under the jurisdiction of the SEC. The company claims that buyers and sellers are simply exchanging assets without any contractual obligation. Coinbase’s top lawyer, Paul Grewal, compared the situation to a famous Supreme Court case known as Howey, where the court determined that orange sales tied to real estate transactions were investment contracts. Grewal stated that any investment contract involving Coinbase’s tokens would have occurred between the creator of the tokens and the initial buyers, not Coinbase itself.

Coinbase also invokes the theory that tokens can cease to be securities as their host blockchains become decentralized. However, this argument has not been thoroughly tested in U.S. courts due to the relatively new and evolving nature of cryptocurrency laws. In addition, Coinbase is relying on a fair notice defense, claiming that the SEC did not adequately inform them of the relevant laws before initiating the lawsuit. The outcome of the case poses a significant threat to Coinbase and other U.S. crypto companies, and a ruling on the dismissal motion is not expected until late 2023. It is more likely that the case will be decided at the summary judgment stage in 2024, where both parties will present arguments based on a full body of evidence.

Read the complete article

(Visited 6 times, 1 visits today)

About The Author

Niels I have been passionate about dogecoin since 2019, and have since become an avid follower and advocate of the cryptocurrency. I keep a close eye on the Dogecoin market and trends, and I'm always up-to-date with the latest news and developments. As a true believer in the potential of dogecoin, I am excited to be a part of the growing community and I'm eager to share my knowledge and experience with others. When not busy with dogecoin, I enjoy golf, and I can often be found on the golf course.

You Might Be Interested In


Your email address will not be published. Required fields are marked *

This is default text for notification bar