[NEWS] U.S. court rejects Coinbase's claims in SEC lawsuit

On the 28th of last month, U.S. District Court Judge Katherine Polk Failla denied a motion to dismiss filed by Coinbase, a U.S. cryptocurrency exchange, in a lawsuit against the U.S. Securities and Exchange Commission (SEC).

This means that the dispute between the SEC and Coinbase will continue.

The lawsuit is about Coinbase operating exchange, brokerage, and clearing services, and offering and selling securities through staking services, while not registering with the SEC. Coinbase argued that the SEC has exceeded its authority granted by Congress.

The court also dismissed Coinbase's claim that the SEC has failed to establish regulations regarding cryptocurrencies that are considered securities under the Administrative Procedure Act (APA). In its opinion, the court argued that the SEC is not creating a new regulatory authority, but rather is engaging in a fact-based application of existing standards.

Furthermore, he said that the SEC's lawsuit alleging that Coinbase's operation of exchange, brokerage, clearing and other services is illegal "has made a sufficient case." This increases the possibility that the court will find some of Coinbase's services to be in violation of securities laws.

On the other hand, the SEC's claim that Coinbase operated as an unregistered broker when it provided its wallet app to users was rejected.

Unfavorable developments, but also positive views

The court's decision could work against Coinbase. On the other hand, Coinbase CEO Brian Armstrong made a positive comment, saying, "There has been great progress in the SEC's lawsuit. This is a big win for self-custodial wallets."

"This decision allows the on-chain ecosystem to continue to innovate and create economic freedom around the world," he said, "and we will continue to fight until the job is done to clarify the rights and rules for using crypto assets."

Going forward, Coinbase and the SEC must submit a litigation management plan by the 19th of this month.

Reference:Judgment,Armstrong X
Image: Shutterstock

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