Coinbase, a prominent cryptocurrency exchange, has faced a setback in its legal battle with the United States Securities and Exchange Commission (SEC). A U.S. court, presided over by Judge Katherine Failla, has rejected Coinbase’s attempt to dismiss the SEC’s case against them.
According to court documents dated March 27, the SEC filed a lawsuit against Coinbase in June 2023, accusing the exchange of operating as an unregistered exchange, broker, and clearing agency. The regulatory body alleged that Coinbase violated federal securities laws by listing 13 tokens that it considered to be securities. In response, Coinbase sought to have the case dismissed, questioning the SEC’s jurisdiction over crypto exchanges.
Coinbase argued that the transactions conducted on its platform should not be classified as financial securities, and therefore, the SEC’s authority does not extend to them. However, the SEC contended that some of these transactions can be categorized as investment contracts.
Judge Failla rejected Coinbase’s motion to dismiss the case, citing previous instances where similar transactions were deemed to be securities transactions. Additionally, the court noted that Coinbase has not registered with the securities regulator, further strengthening the SEC’s case.
Both parties have been instructed to submit a proposed case management plan by April 19, as stated in the court documents.
In related news, the SEC is seeking fines and penalties amounting to $2 billion from Ripple, another cryptocurrency company, as announced by Ripple’s chief legal officer.