- Court has ruled against Coinbase motion for dismissal of charges of operating as an exchange, broker and clearing agency.
- Court has sided with SEC on staking program issue but supports Coinbase on SEC claims regarding wallet.
- Case will proceed as US District Judge Katherine Polk Failla mostly denied Coinbase’s motion to dismiss the SEC’s charges.
In June of 2023, the US Securities & Exchange Commission (SEC) levied charges against Coinbase Exchange, claiming that the trading platform operates as an unregistered securities exchange. It was around the same time as when the financial regulator went after Binance Exchange. Both platforms denied the charges.
Also Read: US SEC sues Coinbase a day after move against Binance
Coinbase versus SEC case to proceed as court sides with regulator
A day after the SEC filed a lawsuit against Binance last year, it went after Coinbase in a sign that the clampdown is extending to key players in the industry. The latest development in the matter is that the court has ruled in favor of the financial regulator, which means the case will continue.
Today, the Court decided that our SEC case will move forward on most of the claims, but dismissed the claims against Coinbase Wallet. We were prepared for this, and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation. 1/6
— paulgrewal.eth (@iampaulgrewal) March 27, 2024
In an 84-page decision on Wednesday, US District Judge Katherine Polk Failla leaned in favor of the SEC, when she largely denied the motion to dismiss the regulator’s earlier request to dismiss the SEC’s charges. In its request to dismiss, Coinbase charged:
- SEC violated Coinbase's right to due process by not providing the industry with fair notice that crypto assets traded on digital platforms could be considered securities.
- Invoking the major questions doctrine, a guiding principle established by the Supreme Court. It stipulates that Congress should not delegate to agencies like the SEC on matters of major political or economic significance.
However, Judge Polk argued that the SEC had provided proper notice through written guidance, litigation and other actions. An excerpt from the judge’s ruling reads:
Having now carefully considered the parties' arguments ... the Court concludes that because the well-pleaded allegations of the Complaint plausibly support the SEC's claim that Coinbase operated as an unregistered intermediary of securities, Defendants' motion must be denied in large part.
Nevertheless, Coinbase took some wins home, including that the case against one product, Coinbase Wallet, could be dismissed. This determination came as the platform did not mention the wallet as a source of revenue in its most recent shareholder letter.
While the judge’s decision is a big blow to Coinbase, the outcome, as alluded to by Judge Failla, exposes a notable split among lower courts on how judges should treat crypto assets. Coinbase and the SEC have until April 19 to submit a case management plan, detailing the key issues that are in the case and how they intend to pursue these issues at trial.
Key takeaways from the Judge Polk's address are:
- The SEC's claim that Coinbase Wallet is an unregistered broker has been rejected.
- Coinbase staking program shutdown rejected
- Coinbase operates as an exchange, as a broker, and as a clearing agency under the federal securities laws and, through its staking program,
- Coinbase engages in the unregistered offer and sale of securities
- The SEC may continue to sue Coinbase exchange
Bitcoin price slipped below $69,000 following the announcement that the Judge had given the SEC a green light to pursue lawsuit against Coinbase.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
IRS says crypto staking should be taxed in response to lawsuit
The IRS stated that rewards from cryptocurrency staking are taxable upon receipt, according to a Bloomberg report on Monday, which stated the agency rejected a legal argument that sought to delay taxation until such rewards are sold or exchanged.
Solana dominates Bitcoin, Ethereum in price performance and trading volume: Glassnode
Solana is up 6% on Monday following a Glassnode report indicating that SOL has seen more capital increase than Bitcoin and Ethereum. Despite the large gains suggesting a relatively heated market, SOL could still stretch its growth before establishing a top for the cycle.
Ethereum Price Forecast: ETH risks a decline to $3,000 as investors realize increased profits and losses
Ethereum is up 4% on Monday despite increased selling pressure across long-term and short-term holders in the past two days. If whales fail to maintain their recent buy-the-dip attitude, ETH risks a decline below $3,000.
Crypto Today: BTC hits new Trump-era low as Chainlink, HBAR and AAVE lead market recovery
The global cryptocurrency market cap shrank by $500 billion after the Federal Reserve's hawkish statements on December 17. Amid the market crash, Bitcoin price declined 7.2% last week, recording its first weekly timeframe loss since Donald Trump’s re-election.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.