Coinbase Plans to File Motion Challenging SEC Lawsuit

Coinbase plans to file a petition seeking the dismissal of a lawsuit brought by the Securities and Exchange Commission (SEC). The cryptocurrency exchange is planning to argue in court that it did not list the securities on its platform and that the SEC has no jurisdiction over crypto exchanges.

The Chief Legal Officer of Coinbase, Paul Grewal, made the announcement yesterday (Thursday) during the exchange's earnings call. Grewal expressed optimism that Coinbase was likely to win the case against the regulator.

Coinbase Takes On the SEC

The SEC sued Coinbase in June for allegedly operating its crypto asset trading platform illegally and offering unregistered securities. Additionally, the regulator claims that Coinbase comingled and illegally offered the services of exchange, broker-dealer, and clearinghouse, which according to the law governing securities, ought to have been separated.

Coinbase maintains that there is no regulatory clarity for the digital asset sector and that the regulators seem to have conflicting stances on digital assets. The exchange cited statements issued by the SEC and the CFTC regarding whether Ether is a commodity or a security.

In March, the CFTC's Chairman, Rostin Behnam, reiterated that Ether is a commodity, while the SEC maintains that all cryptocurrencies except Bitcoin are securities. However, in a longstanding legal battle between the SEC and Ripple, a judge in New York issued a landmark judgement that cryptocurrency XRP was not considered a security when sold to retail investors.

"Still, despite our good faith efforts and transparency of our business to the SEC for years now, we were deeply disappointed that the SEC brought an unwarranted enforcement action against us in June, and that ten states initiated proceedings about our staking services," Coinbase said.

Coinbase Q2 Earnings

Coinbase reported a decline in revenue of 10% quarter-over-quarter to USD $662 million. Besides that, the exchange reported a decline in transaction revenue of 13% quarter-over-quarter due to a drop in trading volumes. Similarly, Coinbase's revenue from the consumer segment declined 12% quarter-over-quarter.

On August 1, a federal judge in Manhattan opined that cryptocurrencies could be considered securities regardless of the context in which they are marketed. The opinion seems to contradict an earlier statement issued in the same jurisdiction involving the case between the SEC and Ripple, which stated the opposite.