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NY district judge has yet to decide
Coinbase , one of the largest crypto exchanges globally , bit back on Wednesday during a hearing to settle whether it committed security violations . Coinbase is motioning to terminate the lawsuit .
TheU.S. Securities and Exchange Commission filed the suitin June 2023 , just one day after it sued Binance , the largest crypto rally by volume , over securities matters .
Coinbase principal legal officer expects new crypto jurisprudence to number in wake of SEC lawsuits
In the SEC ’s claims against Coinbase , it also alleged that the 13 cryptocurrencies available for trading on the interchange were security department . The list include major tokens like Solana , Cardano and Polygon . Although freestanding , theBinance suitalso had12 crypto asset mentionedas security . The two had six overlapping souvenir that the SEC marked as securities : SOL , ADA , MATIC , FIL , SAND and AXS .
Coinbase has requested that New York District Judge Katherine Polk Failla dismiss the suit because it alleges that cryptocurrencies are n’t under the jurisdiction of the SEC as shares in companies ( parentage ) are . The exchange , along with other crypto firm , thinks the SEC has overstepped its privilege .
Failla questioned the SEC during the Manhattan Margaret Court hearing . The judge requested that the securities - focused agency explain what element of crypto assets constitute investment contracts . Failla noted her concerns that the SEC is call for for permission to “ branch out the definition of what form as a security . ”
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Patrick Costello , an SEC help master litigation counsel , argued that because crypto asset are typically tied to a blockchain web or “ enterprise , ” they are exchangeable to investment contracts . The delegacy argued that Coinbase is attempt to make its own Howey test , the legal framework that determines whether an plus is an investiture contract .
Typically , the SEC has a strong raceway record of winning its lawsuits , but given its late retiring loss in other crypto - related suits — Ripple get a partial winin July 2023 andGrayscale got a favorable rulingin August 2023 — some people mail on X were optimistic for Coinbase .
Jake Chervinsky , primary legal officer at Variant Fund , said on Xthat Failla noted other problems with the SEC ’s suit like its “ poor understanding ” of the technology . “ This does n’t mean Coinbase will needfully gain its motion for judgment on the pleading , ” Chervinsky wrote . “ But it does expose the rightful emptiness of policymakers ’ claims that ‘ the law is clear ’ and ‘ the industry just does n’t want to comply . ’ It ’s a fight , but we have the gamy solid ground . ”
SEC director says ‘ nothing has changed ’ for enforcement even as the crypto industry growl
After a five - hour hearing , Failla said she has question and “ some answer , ” but declined to give a opinion on Wednesday .
Dave Rodman , founder and managing spouse of Rodman Law Group , said in a affirmation shared with TechCrunch+ that he thinks it ’s “ highly unconvincing ” that the justice will rule in favor of Coinbase . “ This does n’t mean that the SEC is correct and Coinbase is wrong , it ’s just that it ’s rare for a judge to grant a movement to dismiss at this leg . ”
But Rodman mark that this is a “ reasonably extreme subject ” of a regulator wanting to “ have its cake and eat it , too , ” since the SEC deemed Coinbase sound enough to name it on the U.S. stock exchange when the company exit public in 2021 .
Crypto enforcer wielded a heavy hand this year , but do n’t anticipate it to get flabby in 2024
The listening is another nail - pungent minute for the crypto diligence that has seen a number of court struggle that have led to ordinance by enforcement rather than young policies being made . Although there is n’t an official outcome yet , the judge ’s pending ruling , or dismissal , could have huge implications on cryptocurrencies and how they are regulated in the U.S.
If the evaluator does n’t terminate the question and rules in favor of the SEC , it could result in the cryptocurrencies mention in its cause being seen as securities , which would behold them to the legal framework that others adhere to . This means each plus would have to comply with fiduciary obligation exchangeable to what publicly traded companies have .
One of the many problems with this , though , is that the blockchain underlie the item would fundamentally become an owner , like a company is to its own stock . give that blockchains aim to be decentralise , this could cause the waters to become extremely murky .
On the flip side , if the judge does discount the movement and rule in favor of Coinbase , it could spread out the door for more dialogue and policy creations around crypto asset and what bucket they fit into when it comes to protecting U.S. investor . As it stand , the SEC and CFTC ( Commodity Futures Trading Commission ) have openly submit that they view bitcoin as a commodity , for now .
But the two agencies do n’t see eye to eye on everything . The SEC views most crypto assets ( aside from Bitcoin ) as securities . But per the CFTC’sfilingin March 2023 against Binance , the regulator said sure digital assets , including Bitcoin , ether , Litecoin , as well as lead and the Binance USD , are commodity .
Are cryptocurrencies good or securities ? Depends on which US agency you ask
