Coinbase, going through SEC lawsuit, says regulator lacks police energy over crypto

By Jonathan Stempel

NEW YORK (Reuters) – Coinbase (NASDAQ:), the most important U.S. cryptocurrency platform, stated it can ask a choose to dismiss the U.S. Securities and Trade Fee lawsuit claiming it broke the regulation by failing to register its enterprise.

In a letter filed simply earlier than midnight on Wednesday in Manhattan federal courtroom, Coinbase stated the SEC has no authority to pursue civil claims as a result of belongings buying and selling on its platform usually are not “funding contracts,” and thus not securities.

“The SEC can pursue its claims provided that the tokens and staking providers it has recognized are ‘securities,'” Coinbase stated. “They don’t seem to be.”

Spokespeople for the SEC didn’t instantly reply to requests for touch upon Thursday.

The SEC sued Coinbase on June 6, saying it made billions of {dollars} performing as a intermediary together with by buying and selling at the least 13 crypto belongings, or tokens, corresponding to , and Polygon that ought to have been registered as securities.

Coinbase was additionally sued over a “staking” program the place it swimming pools crypto belongings to help exercise on the blockchain community, in trade for “rewards” it gives clients after taking commissions for itself.

The lawsuit was filed sooner or later after the SEC sued Binance, the world’s largest cryptocurrency trade, accusing it of inflating buying and selling volumes, mishandling buyer funds and mendacity about its operations.

SEC Chair Gary Gensler has been attempting to claim jurisdiction over the crypto trade, which he has stated undermined investor belief within the U.S. capital markets.

In a separate 177-page submitting denying the SEC’s substantive claims, Coinbase stated it “welcomes regulation,” however that the regulator was arbitrarily and with out Congress’ permission attempting to fill the “regulatory hole” over crypto belongings.

“Company enforcement authority is essential however not boundless,” it stated. “The SEC’s motion right here is past these bounds and illegal.”

Shares of Coinbase’s guardian Coinbase World rose $1.58, or 2.2%, to $72.33 in afternoon buying and selling on the Nasdaq.

The case is SEC v Coinbase Inc et al, U.S. District Court docket, Southern District of New York, No. 23-04738.