- New developments emerged around Coinbase’s legal battle against SEC.
- Ripple CFO extended his support to Coinbase.
The legal proceedings involving the U.S. Securities and Exchange Commission (SEC) and Coinbase have evolved into a complex issue.
The focal point remains the determination of whether transactions related to approximately a dozen tokens on the U.S. exchange should be classified as securities.
Legal battles ensue
During a recent court hearing, both the SEC and Coinbase concurred that the tokens themselves should not be deemed securities. However, the disagreement rose over the nature of these transactions.
The SEC contended that each trade essentially constitutes an investor entering a token ecosystem, with the expectation of sharing in its gains.
According to SEC lawyers, if any of these transactions are deemed an investment contract, Coinbase would be in violation of securities law.
In contrast, Coinbase argued that these are secondary-market trades lacking a contractual basis, and therefore, they should not be classified as securities.
The CFO chimes in
Paul Grewal, Chief Legal Officer at Coinbase, expressed his views on the ongoing lawsuit through a Twitter statement.
He highlighted the arguments made in the motion to dismiss the SEC suit against Coinbase, emphasizing the SEC’s purportedly broad authority over all investments without providing clear limitations on the definition of an investment contract.
Grewal underscored the significance of legislative discussions and Congress’s role in determining regulatory frameworks, asserting that the SEC should not unilaterally expand or redefine its regulatory scope.
He concluded by affirming Coinbase’s confidence in its legal arguments and expressed anticipation for a decision that would bring much-needed clarity to the industry.
Additionally, Grewal affirmed Coinbase’s stance that it does not offer securities and emphasized the company’s commitment to legal transparency throughout the proceedings.
Today we made arguments in our motion to bounce the @SECgov suit against @Coinbase. After hours and hours, this much remain clear: the SEC continues to claim broad authority over all investments while offering no limiting principle to its definition of investment contract. 1/4
— paulgrewal.eth (@iampaulgrewal) January 17, 2024
Crypto community shows support
Stuart Alderoty, the Chief Legal Officer for Ripple, showed his support for the exchange’ legal team as well. In a tweet on 18th January, he commended Coinbase’s legal team for persistently championing the cause against regulatory scrutiny.
— Stuart Alderoty (@s_alderoty) January 17, 2024