Coinbase and the U.S. Securities and Exchange Commission (SEC) are set to meet in a New York court on January 17 at 10 a.m. ET for a hearing regarding Coinbase's request to dismiss the lawsuit filed by the SEC. The SEC, which sued Coinbase on June 6, 2023, alleges that the exchange violated federal securities laws by listing 13 tokens it considers securities. These tokens include Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), NEAR Protocol (NEAR), Voyager (VGX), Dash (DASH), and Nexo (NEXO).
Jeremy Hogan, a partner at Hogan and Hogan, notes that while motions to dismiss are generally not often granted, District Judge Katherine Polk Failla has a history of dismissing cryptocurrency-related cases, including a 2013 case against Uniswap for the alleged sale of “scam tokens.” Coinbase seeks to dismiss the case, challenging the SEC's jurisdiction over crypto exchanges and highlighting that the SEC did not previously require it to register as a securities exchange when approving its registration statement in April 2021.
Hogan observes that Judge Failla's previous decisions, her understanding of the technology, her classification of Ethereum as a commodity, and her view that Congress should play a role in regulation, make the outcome of the hearing intriguing. Meanwhile, cryptocurrency legal expert MetaLawMan anticipates that Judge Failla will pose challenging questions to the SEC’s attorneys during the hearing, but refrains from predicting the outcome until the hearing concludes.
This case is part of the SEC's broader efforts to regulate the cryptocurrency industry following the collapse of FTX in November 2022. The outcome could significantly impact the status of various crypto tokens in the U.S. The SEC's argument against Coinbase mirrors its approach in the Binance case, referencing a recent decision against Terraform Labs for selling unregistered securities, which the SEC believes strengthens its position against crypto exchanges.
