The United States Securities and Exchange Commission (SEC)ย filed a response to Coinbaseโs claims that the regulator lacks jurisdiction to prosecute the crypto exchange.
According to a letter sent by the SEC to a district judge on July 7, Coinbase had knowledge of the probability that federal securities laws would apply to its operations, openly informing its shareholders about the possibility of assets traded on its platform being classified as securities.
โSince becoming a public company, Coinbase has repeatedly informed its shareholders of the risk that the crypto assets traded on its platform could be deemed securities and therefore that its conduct could violate the federal securities laws,โ reads the regulatorโs response.
As per the SEC, Coinbase is a โmulti-billion-dollar entity advised by sophisticated legal counselโ that is deliberately โignoring more than 75 years of controlling law under Howeyโ in an attempt โto construct its own test for what constitutes an investment contract.โ
The letter is a response to a previous filing from Coinbase. On June 28, the exchangeย notified the court about its intention to file a motion for judgment.ย According to Cornell University, a motion for judgment is used if a party believes there is no real dispute about material facts in a case.
In this previous letter, Coinbase brought up an appearance of the SEC Chair Gary Gensler before Congress, when he allegedly claimed: โThere is not a market regulator around these crypto exchangesโ and โonly Congress could confer authority to regulate crypto exchanges.โ Coinbase also pointed out that two years after going public, the SEC filed charges for activities โexhaustively describedโ to the regulator and the general public.
Speaking with Cointelegraph, corporate and securities lawyer Roland Chase explained that โall that the SEC is authorized to do by Congress is to review the going public documents and provide comments and ask questions in an effort to improve the companyโs disclosure to potential investors,โ adding that federal securities laws governing the โgoing publicโ process are disclosure-based. โThat means that the SEC does not, and in fact cannot, deny a companyโs public listing merely because it thinks investing in that company is a bad idea,โ he said.
On June 6, the regulatorย charged Coinbaseย for allegedly offering unregistered securities since 2019.ย A pre-motion conference on the case is scheduled to July 13 at 2:00 pm UTC.
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