The Securities and Exchange Commission overstepped its authority when it classified Coinbase-listed cryptocurrencies as securities, the exchange has argued in its final bid to dismiss a lawsuit by the securities regulator.
In an Oct. 24 filing in a New York District Court, Coinbase chastised the SEC claiming its definition for what qualifies as a security was too wide and contested that the cryptocurrencies the exchange lists are not under the regulator’s purview.
“The SEC’s authority is limited to securities transactions. Not every parting of capital with a hope of gain qualifies, and trades over Coinbase are only securities transactions if they involve ‘investment contracts.’ The transactions at issue here do not.”
Coinbase claimed the SEC has undertaken a “radical expansion of its own authority” and claimed jurisdiction “over essentially all investment activity” which only Congress is entitled to do under the major questions doctrine.
In an Oct. 24 X post, Coinbase’s chief legal officer Paul Grewal echoed the claims saying the SEC’s definitions have “no limiting function at all.”
By arguing that any purchase in which the buyer hopes for an increase in value constitutes an investment contract-and therefore a security-the SEC is attempting a radical expansion of its own authority. Only Congress can do that as the major questions doctrine makes clear. 2/3
— paulgrewal.eth (@iampaulgrewal) October 24, 2023
Coinbase’s recent filing comes in response to the SEC’s Oct. 3 rebuttal where it asked the court to reject Coinbase’s dismissal motion, iterating its belief that various cryptocurrencies Coinbase listed were investment contracts under the Howey test.
Related: Securities regulators oppose special treatment of crypto in Coinbase case
The SEC sued Coinbase on June 6, claiming the exchange violated U.S. securities laws by listing several tokens it considers as securities and not registering with the regulator.
Coinbase filed the motion for judgment on June 29 arguing the SEC was abusing its power and violating Coinbase’s due process rights.
Judge Katherine Polk Failla, who oversees the case, may ask Coinbase and the SEC to appear in court for oral arguments and then could issue judgment on the case, dismiss it or move for it to be heard in front of a jury.
Magazine: Hall of Flame: Crypto lawyer Irina Heaver on death threats, lawsuit predictions