Coinbase Moves to Dismiss SEC Lawsuit, Alleging Crypto Falls Out of Regulator’s Oversight

Coinbase filed for judgement in its ongoing case against the U.S. Securities and Exchange Commission, alleging the regulator is stepping well outside its jurisdiction in suing the crypto exchange.

The SEC sued Coinbase in June, alleging the exchange violated federal securities laws by operating as an unregistered broker, exchange and clearing agency for cryptocurrencies that were securities, naming 13 tokens as examples of coins it believed met those requirements. Coinbase pushed back in its filing on Friday, saying the SEC is not claiming there are investment contracts involved in any of these examples.

“The transactions over Coinbase’s platform and Prime are not, and do not involve, contractual undertakings to deliver future value reflecting the income, profits, or assets of a business. They are commodity sales, with the obligations on both sides discharged entirely the moment the digital token is delivered in exchange for payment,” the filing said.

The filing pointed to the recent ruling in the SEC’s case against Ripple, saying the underlying facts were “substantially identical to those alleged here.”

Coinbase also pointed again to the Major Questions Doctrine, which it raised in a previous filing, saying the suit would vastly expand the regulator’s jurisdiction to include the cryptocurrency industry.

Coinbase attached 10 different exhibits to its motion, including transcripts from a hearing in the SEC’s case against LBRY and orders from previous cases involving Howey Test questions.

The SEC has until Oct. 3, 2023 to file a response, and any amicus briefs supporting Coinbase can be filed until Aug. 11, 2023.