Coinbase loses its appeal against SEC lawsuit

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Coinbase loses its appeal against SEC lawsuit

The SEC filed suit against Coinbase in June, alleging that the company failed to register as a securities exchange with the Securities and Exchange Commission. Cryptocurrency changing hands isn't the same as investment contract, said Coinbase, who has sought to get the case dismissed.

That should be ignored, said the SEC in a filing Tuesday. The court's eventual interpretation of who is getting the so-called Howey test right: Coinbase, with its narrower view, or the SEC, which declares Howey is meant to be flexible and widely interpreted when it defines a security that must be regulated by the SEC.

Therefore, investment contracts and whether customers on Coinbase's trading platform were entitled to the protections afforded by the federal securities laws that require intermediaries of securities transactions to register with the SEC.

The U.S. securities regulatory agency pressed back on the allegations that just because the agency allowed Coinbase to go public didn't mean it was an automatic endorsement that the trading on that platform conformed to securities laws.

The court's ruling clarification clarified the legal regime surrounding what is and isn't an investment contract.