Judge Issues Ruling In SEC V Coinbase Case
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March 27, 2024 10:41 pm
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A judge has issued a ruling regarding the Securities and Exchange Commission’s slated case against the Coinbase exchange.
The court has decided that the SEC case against Coinbase can move forward and be heard in front of a jury. Coinbase’s stock fell by roughly 2.5% in response to the news.
Paul Grewal, Coinbase’s Chief Legal Officer, issued this statement on social media following the decision from the court:
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“Today, the Court decided that our SEC case will move forward on most of the claims, but dismissed the claims against Coinbase Wallet. We were prepared for this, and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation.
Early motions like ours against a government agency are almost always denied. But clarity is the ultimate goal and today’s decision continues us on that path.”
Early motions like ours against a government agency are almost always denied. But clarity is the ultimate goal and today’s decision continues us on that path. 2/6
— paulgrewal.eth (@iampaulgrewal) March 27, 2024
We also appreciate the Court’s understanding that technology innovations like Coinbase Wallet do not and cannot implicate US securities laws. 4/6
— paulgrewal.eth (@iampaulgrewal) March 27, 2024
You can read the full decision for yourself here. 6/6 https://t.co/JalnGDcV7J
— paulgrewal.eth (@iampaulgrewal) March 27, 2024
According to Forbes:
Coinbase had been contending in its motion that the SEC overstepped its authority granted by Congress.
However, the opinion described the overall crypto markets as lacking a significant role in the U.S. economy when compared to clean energy markets and student loan forgiveness programs.
Former SEC Chief John Reed Stark provided portions of the court order allowing the SEC’s lawsuit to proceed:
“The Court finds the SEC has sufficiently pleaded that Coinbase operates as an exchange, as a broker, and as a clearing agency under the federal securities laws, and through its Staking Program engages in the unregistered offer and sale of securities.”
“As explained herein, the ‘crypto’ nomenclature may be of recent vintage, but the challenged transactions fall comfortably within the framework that courts have used to identify securities for nearly eight years.”
Said the SEC in an email to CoinDesk: “We’re pleased that yet another court has confirmed that, while the term ‘crypto’ may be relatively new, the framework that courts have used to identify securities for nearly 80 years still applies. It’s the economic realities of a transaction, not the labels, that determine whether a particular offering constitutes a security.”
Yet Another Blow to Coinbase and Yet Another SEC Crypto Enforcement Victory
In an 84-page order, the U.S. District Court for the Southern District of New York has denied Coinbase’s motion to dismiss the U.S. Securities and Exchange Commission’s case against Coinbase. The… pic.twitter.com/smtekAz4q9
— John Reed Stark (@JohnReedStark) March 27, 2024
CNBC added:
In January, the SEC approved a raft of U.S. spot bitcoin exchange-traded funds. Many of these ETFs have partnered with Coinbase as their custody partner.
These U.S. spot funds have seen record flows since launching in January. Collectively, they have brought in around $52 billion.
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