© Reuters. FILE PHOTO: Smartphone with displayed Coinbase logo and representation of cryptocurrencies are placed on a keyboard in this illustration taken, June 8, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
By Hannah Lang and Chris Prentice
(Reuters) – The U.S. Securities and Exchange Commission (SEC) on Tuesday asked a federal judge to deny a motion from Coinbase (NASDAQ:) Global to dismiss the regulator’s lawsuit against the cryptocurrency exchange.
The agency said Coinbase was wrong to rely on a recent court ruling that found cryptocurrency developer Labs Inc did not violate federal securities law by selling its XRP token on public exchanges, citing a subsequent ruling in the case of Terraform Labs that rejected the court’s reasoning.
THE TAKE
Tuesday’s filing showed that the SEC is seizing on the Terraform Labs ruling to raise questions about the ruling in the Ripple case, which the crypto industry had hailed as a victory.
THE CONTEXT
The SEC sued Coinbase in June, accusing it of operating illegally as a national securities exchange, broker and clearing agency without registering with the regulator.
Coinbase in August asked a federal court in Manhattan to dismiss the case, arguing that the SEC had no authority to pursue its lawsuit because the digital assets and services at issue did not qualify as securities.
KEY QUOTE
“With the exception of the Wallet application, Coinbase does not here dispute it carried out the functions of exchange, broker, and clearing agency. Thus, the Motion hinges on whether Coinbase intermediated transactions involving investment contracts, and thus securities. It did,” the SEC said in the filing.
In a tweet, Paul Grewal, Coinbase’s chief legal officer, called the SEC’s filing “more of the same old same old.”
“The assets we list on our platform are not securities and are not within the SEC’s jurisdiction,” he said.
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