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News on Crypto Street
The United States Securities and Exchange Commission (SEC) has responded to Coinbase's recent filing, addressing the exchange's claim that it made a "calculated decision" to act as an unregistered securities intermediary. In June, Coinbase filed a request to dismiss the SEC's charges against them.
The SEC had launched legal actions against two prominent players in the crypto industry, Binance (including its US affiliate) and Coinbase, in early June. Coinbase swiftly responded by seeking to dismiss all charges a few weeks after the lawsuit was filed. In their filing, Coinbase argued that the SEC had previously approved their business model when they allowed the exchange to become a publicly-traded company in 2021.
Despite Coinbase's repeated attempts to engage in positive regulatory discussions with US watchdogs, no progress has been made thus far. The company has even requested greater clarity on the SEC's regulatory policies concerning cryptocurrencies, but the agency has yet to respond.
However, on July 7, the SEC issued a response to Coinbase's request to dismiss the charges. The SEC's filing argues that Coinbase's own actions contradict its claim of being unaware that its conduct could violate federal securities laws. The Commission also asserts that Coinbase has repeatedly cautioned its shareholders about the risk of crypto assets traded on its platform being classified as securities and potentially violating securities laws.
According to the SEC, Coinbase disregarded "more than 75 years of controlling law under Howey" and presented two flawed arguments in its dismissal request. The first argument posited that an investment contract must involve a formal, common law contract, while the second claimed that if a crypto asset is considered an investment contract during its initial offering, it cannot be classified as such when traded between non-issuers on a platform like Coinbase's. The SEC asserts that both arguments are incorrect.
This response from the SEC indicates that the legal battle between Coinbase and the regulatory agency is ongoing, with the SEC disputing Coinbase's claims and presenting counterarguments in defense of its charges. The outcome of this case will likely have significant implications for the regulatory landscape surrounding cryptocurrencies in the United States.
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