Crypto market hit again: US judge agrees SEC to continue suing Coinbase
US regional judges have agreed to the US Securities and Exchange Commission (SEC) filing a lawsuit against the cryptocurrency exchange platform Coinbase. The SEC accuses Coinbase of engaging in illegal activities such as unregistered securities sales and issuance. The judge believes that the SEC has jurisdiction over cryptocurrencies and states that crypto trading falls within the securities framework. This ruling is a victory for the SEC, but the case may enter a lengthy investigation phase and may require a Supreme Court ruling. Coinbase's Chief Legal Officer stated that the company remains confident in the lawsuit. The SEC sued Coinbase in June last year, accusing it of profiting from facilitating illegal securities sales
According to the Zhitong Finance and Economics APP, Judge Katherine Polk Failla in the United States ruled that the U.S. Securities and Exchange Commission (SEC) can continue to sue Coinbase (COIN.US), the largest cryptocurrency exchange platform in the United States. The judge stated on Wednesday that the SEC has made sufficient allegations that Coinbase engaged in "unregistered securities sales and issuance," operating illegally as an exchange, broker, and clearing agency.
This decision is a blow to Coinbase and other cryptocurrency participants who believe that the SEC does not have the authority to regulate them because they do not trade "securities" that require registration.
The judge stated, "While the term 'crypto' may be relatively new, the transactions in question fit squarely within the 80-year-old framework the courts have used to identify securities."
This ruling is a victory for the SEC, which claims jurisdiction over cryptocurrencies.
The decision was made in the early stages of the case, where the judge was asked to determine if the SEC's allegations were sufficient to allow the case to proceed.
Elliott Stein, a senior litigation analyst at Bloomberg Intelligence, said that this case "could enter a lengthy investigative phase lasting months or even years," in addition to appeals. Stein mentioned that the final resolution may require a ruling from the U.S. Supreme Court.
Paul Grewal, Chief Legal Officer of Coinbase, stated, "We are prepared for this and look forward to learning more about the SEC's internal views and discussions on crypto regulation." Grewal expressed confidence in the company's legal arguments against the SEC lawsuit.
Last June, the SEC sued Coinbase, alleging that since 2019, Coinbase had made billions of dollars by illegally promoting securities sales. The SEC claimed that Coinbase failed to register as an exchange, broker, and clearing agency as required.
A spokesperson for the SEC stated in a release, "Whether a particular product constitutes a security is based on the economic realities of the transaction, not the label." The spokesperson mentioned that failure to register and comply with securities laws deprives investors of "important protections."
As of Wednesday's close, Coinbase fell by 3.79% to $256.70. Recently, with the volatility and decline of Bitcoin, Coinbase's stock price has retreated, but it still has a year-to-date increase of 48%