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October 25, 2023 Coin Telegraph

Coin Telegraph

Coinbase says the SEC’s definition of an investment contract isn’t in line with U.S. securities laws.

The United States Securities and Exchange Commission overstepped its authority when it classified Coinbase-listed cryptocurrencies as securities, the exchange has argued in its final bid to dismiss a lawsuit by the securities regulator.

In an Oct. 24 filing in a New York District Court, Coinbase chastised the SEC, claiming its definition for what qualifies as a security was too wide and contested that the cryptocurrencies the exchange lists are not under the regulator’s purview.

“The SEC’s authority is limited to securities transactions. Not every parting of capital with a hope of gain qualifies, and trades over Coinbase are only securities transactions if they involve ‘investment contracts.’ The transactions at issue here do not.”

Coinbase claimed the SEC has undertaken a “radical expansion of its own authority” and claimed jurisdiction “over essentially all investment activity,” which only Congress is entitled to do under the major questions doctrine.

In an Oct. 24 X post, Coinbase chief legal officer Paul Grewal echoed the claims, saying the SEC’s definitions have “no limiting function at all.”

By arguing that any purchase in which the buyer hopes for an increase in value constitutes an investment contract-and therefore a security-the SEC is attempting a radical expansion of its own authority. Only Congress can do that as the major questions doctrine makes clear. 2/3
— paulgrewal.eth (@iampaulgrewal) October 24, 2023

Coinbase’s recent filing comes in response to the SEC’s Oct. 3 rebuttal where it asked the court to reject Coinbase’s dismissal motion, iterating its belief that various cryptocurrencies Coinbase listed were investment contracts under the Howey test.

The SEC sued Coinbase on June 6, claiming the exchange violated U.S. securities laws by listing several tokens it considers securities and not registering with the regulator.

Coinbase filed the motion for judgment on June 29 arguing the SEC was abusing its power and violating Coinbase’s due process rights.

Judge Katherine Polk Failla, who oversees the case, may ask Coinbase and the SEC to appear in court for oral arguments and then issue judgment on the case, dismiss it, or move for it to be heard in front of a jury.

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Coinbase to file order seeking dismissal of SEC lawsuit

August 4, 2023 Coin Telegraph

Brian Armstrong

Paul Grewal said Coinbase will seek to dismiss the SEC’s suit on Aug. 4 which will argue that it never sold securities as the regulator alleged.

Coinbase plans to file an order seeking dismissal of the lawsuit by the Securities and Exchange Commission on Aug. 4, with the crypto exchange’s legal chief saying it expects to win the case.

On its Aug. 3 second-quarter 2023 earnings call, Coinbase chief legal officer Paul Grewal expressed confidence the exchange would win the court case brought by the regulator.

“With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win.”

The SEC sued the exchange on June 6 alleging it sold unregistered securities and operated as an unregistered securities exchange. Grewal said Coinbase will file a motion asking the court to dismiss the lawsuit on Aug. 4.

“Tomorrow [...] We will be moving the court for an order dismissing the case in its entirety.”

Grewal said it will argue that Coinbase did not list securities on its platform, that the SEC has no regulatory authority over crypto exchanges and it never suggested to Coinbase there was a requirement to register when it declared Coinbase’s registration statement effective in April 2021.

He expects the brief laying out its arguments will be fully submitted and considered by the court at the end of October.

“Our goal across not just the litigation, but all of our efforts engaging with the SEC and engaging with the U.S. government as a whole is to achieve regulatory clarity,” Grewal said.

“The reason why we are so focused on pushing for regulatory clarity here in the US is that at present, under the status quo, we have very conflicting messages about what the law provides,” said Grewal.

He gave the example of conflicting statements from SEC chair Gary Gensler and CFTC chair Rostin Behnam on the legal status of Ether (ETH).

6/13/23, Ltr to the 3d Circuit: "The Commission has not yet decided what action to take on that petition."

Today: “We can get to crypto later.”

Is there any serious question that a decision was made to deny sensible rules but deliberately withheld from the public?…
— paulgrewal.eth (@iampaulgrewal) August 3, 2023

Behnam said in a March Senate hearing that ETH was a commodity while Gensler has previously stated all cryptocurrencies besides Bitcoin (BTC) are a security.

Many of the laws currently applicable to the space “were written well before the internet even existed,” Grewal added.