On Oct. 4, the SEC filed a court motion seeking to dismiss a patent application filed by the SEC on Oct. 4, alleging that the cryptocurrency exchange has violated multiple securities laws.
In August, the company first tried to have the state's charges thrown out. At that time, it claimed that none of the services offered on its platform fell under securities law.
The SEC has asserted that Coinbase's role in intermediating transactions in investment contracts satisfies the Howey Test, which serve as a litmus test for investment contracts under American securities law.
The agency responded to the problem as follows:
Cryptobase intends to argue that investment contracts must encompass common-law contractual agreements - something that it doesn't rely on.
This is not a requirement, the SEC said. The company said that courts have used the Howey test to apply securities laws to investments made outside of formal contracts, but acknowledged that courts sometimes take into account contractual commitments.
The SEC had earlier claimed that Coinbase is trying to blame it for its current situation by alleged regulatory flaws. The regulator countered, ''cannot really come as a surprise,'' saying that the lawsuit did not really come as a surprise.
The SEC fought against Coinbase's attempts to apply the major questions doctrine. Coinbase intends to argue through this doctrine that Congress has not explicitly delegated authority to the SEC on the matter at hand. The SEC said that it has not assumed any new powers and is working within existing federal securities law.
The Department of Justice said that the agency's attempts to cite a recent ruling in favor of Ripple's token sales do not apply in the current circumstances. The suit fought against Coinbase, Kik, and Telegram, both of which saw the SEC win a settlement against the targeted company.
The SEC filed its suit against Coinbase on June 6th. Cryptocurrencies like Coinbase have chosen to fight the SEC rather than settle for a settlement.