Coinbase, the US-based cryptocurrency exchange, has submitted a motion to dismiss the lawsuit filed against it by the US Securities and Exchange Commission (SEC) in June. The motion, filed on August 4 with the US District Court for the Southern District of New York, contends that the SEC violated due process, abused discretion, and departed from its own prior interpretation of securities law in its attempt to exercise regulatory control over cryptocurrency exchanges. To support its stance, Coinbase's legal team referred to the SEC v. Ripple case, where the judge ruled that XRP did not fit the Commission's criteria for securities.
The filing specifically challenges the SEC's assertion that the trading of the 12 tokens named in the case met the criteria of an "investment contract" under the Howey test. Furthermore, Coinbase disputes the claim that it operated as an unregistered broker, asserting that the Commission' the s arguments against its practices fail as a matter of law. The company's legal team has urged the court to dismiss the case, arguing that the SEC's enforcement actions are overly punitive and exceeded the authority granted to the agency by Congress.
The SEC filed the lawsuit against Coinbase on June 6, following a Wells notice received by the exchange from federal regulators about three months prior. Throughout the process, Coinbase has consistently refused the SEC's allegations of potential violations of securities laws. The exchange recently confirmed its intention to file a motion to dismiss during an earnings call on August 3. Alongside Coinbase, the SEC has also taken enforcement actions against Binance and Richard Heart, the founder of Hex. Meanwhile, US lawmakers have been working on legislation that could potentially reshape the committee's jurisdiction over digital assets if it becomes law.
