The Crypto Roundup: 10 June 2024

Nasdaq-listed cryptocurrency exchange has, In a filing submitted to the U.S. District Court for the Southern District of New York, argued that a specific “controlling question” raised by the U.S. Securities and Exchange Commission (SEC) should be scrutinized.

The crux of the dispute, according to Coinbase’s Chief Legal Officer Paul Grewal, hinges on the definition of an "investment contract" under U.S. securities law. Coinbase contends that such a contract requires "something contractual," specifically obligations after the sale.

The SEC has alleged Coinbase operates as an unregistered exchange, broker and clearing agency, and the recent filing comes after U.S. District Judge Katherine Failla denied Coinbase’s motion to dismiss the case.

This legal battle stems from the SEC's accusation that Coinbase operates as an unregistered securities exchange, broker, and clearing agency. Coinbase maintains that the SEC is overstepping its authority and hindering innovation in the digital asset industry.

The exchange's request for an "interlocutory appeal" could significantly influence the case that has been ongoing since June 2023. The SEC has asserted cryptocurrency transactions on Coinbase represent investment contracts “despite an absence of any alleged contractual undertakings,” according to the exchange, which noted that a “reversal on the question presented would dispose of the SEC’s principal claims.”

Coinbase’s Grewal noted that the exchange’s appeal request was filed early – just 17 days after the motion to dismiss was denied – as the firm believes the SEC’s actions against the exchange and other cryptocurrency firms go “way beyond the legal authority granted by Congress and puts an unjust cloud over US digital asset innovation.”