Cryptos On Coinbase Fall Outside SEC Jurisdiction, Says Exchange In Response To Lawsuit

cryptonews.com:

Coinbase, the largest U.S.-based digital asset exchange, has fired back at the U.S. Securities and Exchange Commission (SEC) in a court filing, stating that the regulator lacks the jurisdiction to institute an enforcement action against the exchange.

Both the SEC and Coinbase are bracing themselves for a lengthy legal battle with the securities watchdog claiming in a June complaint that the exchange listed unregistered securities on its platform. 

However, in its latest filing, Coinbase poked several holes in the SEC’s claims, reeling out a string of points in its defense.

Coinbase denied the claims that the virtual currencies listed on its platform are securities on the grounds that they do not meet the requirements of “investment contracts” under the Howey test. 

In its defense, Coinbase claimed transactions over its secondary market platform are without any “obligation” to investors, making the contract a mere asset sale. 

The exchange further argues that the SEC failed to offer regulatory direction despite multiple requests from Coinbase over the years. 

Coinbase upped the ante via a mandamus to compel the SEC to offer direction but claimed that efforts have been scuttled by the regulator’s extension of time requests.

“Even were the SEC correct that the assets and services it identifies are within the scope of its existing regulatory authority, this action must be dismissed on the independent grounds that it violates Coinbase’s due process rights and constitutes an extraordinary abuse of process,” read the filing.

Coinbase added in its filing that the increased regulatory action by the SEC is a violation of the major question’s doctrine, requiring Congress to avoid delegating major economic decisions to regulatory