Crypto

Coinbase accuses SEC of unlawful attack against the cryptocurrency industry

The SEC can’t regulate digital assets as securities unless it defines them as securities

Coinbase, the leading cryptocurrency exchange in the US, plans to seek a judge’s dismissal of a lawsuit filed by the Securities and Exchange Commission (SEC). The lawsuit accuses Coinbase of breaching the law due to its failure to register its transactions. However, the SEC cannot target digital currencies unless it’s ready to define them, which it still hasn’t done.

Coinbase filed a letter in federal court in Manhattan, just before midnight on Wednesday, stating that the SEC lacks the authority to initiate a civil lawsuit as the assets sold on its platform do not qualify as investment contracts, thereby indicating an absence of safety. However, the SEC remained unresponsive to requests for comment made on Thursday.

On June 6, Coinbase found itself entangled in a legal battle as the Securities and Exchange Commission (SEC) filed a lawsuit against the company. The allegations leveled at Coinbase assert that the platform acted as a lucrative broker, accumulating immense wealth by engaging in the trading of various cryptocurrencies, specifically at least 13 tokens like Solana, Cardano and Polygon. The SEC contends that these assets should have been officially registered.

Coinbase has faced legal action due to a ‘staking’ initiative where it consolidates cryptocurrency assets to foster blockchain network services. Customers receive a ‘reward’ for their participation, while Coinbase takes its commission.

Just 24 hours after the SEC took legal action against Binance, the global leading digital currency exchange, accusing them of fabricating trading volumes, mishandling customer funds and deceitfully concealing their operations, a lawsuit was promptly filed. With a clear determination to safeguard investor trust in the American financial market, SEC Chairman Gary Gensler has persistently pursued measures to regulate cryptocurrency companies, perceiving them as a potential threat.

Coinbase has responded to a 177-page lawsuit filed by the SEC, vehemently refuting any substantial claims made against it. The company acknowledges the underlying principle, yet strongly condemns the regulator’s actions of attempting to close regulatory gaps without the necessary Congressional authority. This challenges the core concepts of cryptography and wealth management.

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