- Coinbase has filed an answer to the SEC’s lawsuit against the exchange, arguing that the regulator violated due process.
- The exchange says the SEC is reaching beyond its jurisdiction in its filing Thursday.
- Coinbase legal team slams the SEC for its regulatory gap and highlights the limits in the agency’s authority.
Crypto exchange Coinbase has slammed the Security & Exchange Commission’s allegations against it, stating that the US regulator has no jurisdiction over assets being traded on the platform. Coinbase, one of the largest exchanges in the crypto ecosystem, is addressing the SEC lawsuit from June 6.
The filing details how the Gary Gensler-chaired agency has violated its due process and is reaching beyond its jurisdiction in its legal battle against Coinbase.
Coinbase files response to SEC, argues overreach and violation of due process
Early on Thursday, the crypto exchange’s legal team filed a response to the SEC’s allegations against Coinbase. The federal regulator has alleged that Coinbase operates its crypto trading platform as an unregistered securities exchange and broker. In its June 6 lawsuit, the SEC argued that at least 13 crypto assets on the exchange are “securities.”
The agency believes that the staking program is an investment contract, and the exchange is, therefore, dealing in unregistered securities.
Coinbase is fighting all these allegations and cites the agency’s overreach, stating that the SEC has no jurisdiction over the cryptocurrencies on its exchange platform. As per the filing, Coinbase has cited fundamental “regulatory gaps” and limits on the SEC’s authority in the digital assets space.
The legal team argues that the agency’s regulatory overreach is the first instance where stand-alone asset sales are being classified as “investment contracts”.
Coinbase believes SEC’s actions reflect escalation of the agency’s authority
In its motion, the exchange has shed light on how the SEC’s regulatory authority has shifted between the previous Chair and current Chair Gary Gensler’s term. While Coinbase has asked the regulator for clarity on regulation and the Congress is ruling on the issue, the exchange argues that the SEC has violated their due process rights.
Coinbase is known to have voluntarily submitted to regulation despite limited formal guidance. However, the agency’s actions now reflect an undisclosed change in its view of authority over cryptocurrencies, according to Coinbase.