Paul Grewal, Chief Legal Officer at Coinbase, announced that the exchange has filed its answer and notice of intent to file a motion to dismiss the US Securities and Exchange Commission's (SEC) lawsuit. Grewal said that the SEC's claims in this case "go far beyond existing law and should be dismissed".
Previously, the SEC sued Coinbase for violating the security laws, alleging that multiple cryptocurrencies it provided were unregistered securities. But Coinbase denied the accusations in the file, saying that cryptos are not investment contracts, and the issuers of the tokens owe no obligations to investors. "Because no such obligations are carried in the transactions over Coinbase's secondary market exchange, and because the value that Coinbase purchasers receive through these transactions inheres in the things bought and traded rather than in the businesses that generated them, the transactions are not securities transactions."
"Even were the SEC correct that the assets and services it identifies are within the scope of its existing regulatory authority, this action must be dismissed on the independent grounds that it violates Coinbase's due process rights and constitutes an extraordinary abuse of process. For years, Coinbase has voluntarily submitted to regulation by multiple overlapping regulatory bodies, has adhered to the public and limited formal guidance from the SEC, senior SEC Staff, and the courts about the application of securities law to its industry, and has begged the SEC for guidance about how it thinks the federal securities laws map onto the digital asset industry as the SEC’s actions reflected an escalating but undisclosed change in its own view of its authority." Coinbase added.
