SEC sides with Coinbase's motion to dismiss its case

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SEC sides with Coinbase's motion to dismiss its case

The SEC has sided with Coinbase's motion to dismiss its case for breaching securities laws.

The SEC charged the leading crypto exchange of the United States in June this year with illegally offering securities on its platform, and provided a brokerage and clearing agency service without registering with the regulatory authority.

In the end of August, Coinbase argued that the cryptocurrency tokens deemed as securities were not investment contracts and said the SEC had no regulatory authority over crypto-related matters.

The SEC has presented a four-point argument in response to the court filing yesterday, saying that its initial complaint was'sufficiently adequate'.

The SEC filed the suit contending that Coinbase 'cries foul and seeks to blame the SEC for its current predicament'. The filing refutes the exchange's arguments that the SEC 'blessed Coinbase's violated conduct when it went public, as well as claiming that SEC Chair Gary Gensler's answers in a Congressional hearing don't apply to the court's application of federal securities laws.

The SEC argues against Coinbase's stance that the agency lacks authority to regulate securities transactions involving crypto assets.

The agency notes that the Howey Test does not require an investment contract, and its 'flexible' and 'adaptable' nature is applicable to crypto assets. The document points out the importance of the Howey Test for crypto assets, demonstrating the application of the law on crypto assets.

In the United States, the Howey Test is a law-based test to determine whether a specific asset can be considered as a security. The test will be named after the Supreme Court case between the SEC and the W.J. Supreme Court. In 1946, Howey Co. established the criteria.

The SEC argued that the cryptocurrency staking service required investment of money for annual returns in a pool managed by Coinbase, which it labeled as a security.

Coinbase's Chief Legal Officer Paul Grewal responded to the SEC ruling on Tuesday in a Twitter thread, saying it 'was more of the same old same old' from the regulator.

Grewal said that tokens on its platform are not securities based on the Court's decisions over the past few months, in a seeming reference to the SEC's loss against Ripple in XRP's securities case.

The SEC's arguments also dismissed the SEC's arguments, saying that items ranging from $1 million to $100 million could be considered securities under its definition-referencing U.S. legislation Rep. Ritchie Torres' questioning of Gensler in a House Financial Services Committee hearing.

Grewal said that the exchange is looking forward to filing its reply on October 24.