Coinbase Filed Motion To Dismiss SEC Case Against the Crypto Exchange

Coinbase, a reputable cryptocurrency exchange based in the US, is taking legal action to dismiss the lawsuit filed by the US Securities and Exchange Commission (SEC).

The SEC accused Coinbase of selling unregistered securities due to the labeling of certain cryptocurrencies, including Cardano (ADA), Solana (SOL), and Polygon (MATIC), as securities.

Coinbase has recently submitted a motion to the Southern District of New York to dismiss a lawsuit. The company claims that the regulatory body does not have jurisdiction and argues that its transactions do not fall under the category of securities.

“Like all securities, an economic arrangement can qualify as an investment contract only if it involves an ongoing business enterprise whose management owes enforceable obligations to investors. Absent such obligations, the contract is just an asset sale.”

The notes continued and said the following:

“Because no such obligations are carried in the transactions over Coinbase’s secondary market exchange, and because the value that Coinbase purchasers receive through these transactions inheres in the things bought and traded rather than in the businesses that generated them, the transactions are not securities transactions.”

Coinbase said that the SEC Chair Gary Gensler is overreaching his authority by saying that crypto companies must register as securities exchanges and that they must be retroactively punished for failing to comply.

“Before the SEC’s recent regulatory overreach, no court had ever interpreted ‘investment contract’ to apply to a stand-alone asset sale. Nor to any arrangement lacking an obligation upon the seller to operate a business for the buyer’s benefit.”

During a conference in New York on Thursday, Coinbase CEO Brian Armstrong expressed his belief that the forthcoming U.S. presidential election next year has the potential to be a pivotal moment for the crypto industry.

Armstrong also mentioned that the current lawsuit brought against the exchange by the U.S.

Securities and Exchange Commission may eventually lead to greater regulatory clarity for the industry as the case progresses through the legal system.

“Frankly, the 2024 election is also a factor here,” Armstrong added. “It’s kind of politically unpopular to be anti-crypto right now, and we are going to see potentially a change here, whether in administration, parties or the SEC chair.”