Last updated on October 5, 2023
The United States Securities and Exchange Commission (SEC) is urging the US District Court to deny cryptocurrency exchange Coinbase’s efforts to dismiss its lawsuit against the exchange. The SEC argues that Coinbase intermediated transactions involving investment contracts, making them securities. Coinbase had submitted a court request for the dismissal of the SEC’s legal action, claiming that the SEC has not successfully identified transactions involving securities and highlighting the ambiguity in determining what qualifies as a security in the crypto industry. However, the SEC restated that Coinbase’s staking rewards constitute investment profits, while Coinbase argues that they are simply payments for putting crypto assets to work. The SEC also accused Coinbase of promoting its staking program as an investment opportunity through its marketing materials. The SEC asserts that Coinbase’s wallet application functions as an unregistered broker and solicits investors to use its trading features.
In response to the legal action, Coinbase CEO Brian Armstrong has criticized the US approach to crypto and has called for regulatory clarity. He has launched a campaign called “Stand with Crypto,” which aims to advocate for regulations that are favorable to the crypto industry. Over 50 crypto founders support this campaign, with the goal of ensuring that the US economy doesn’t miss out on the potential growth of the crypto sector in the coming years. Coinbase has seen an 18% drop in its stock price following the SEC’s filing of the lawsuit.
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