SEC accuses Coinbase of willful violations of securities laws

Lawyers of the SEC questioned the accuracy of Coinbase’s assertion that it did not know it was violating securities laws in its operations. The Block reports this.

«A company with multibillion-dollar capital and an experienced legal team asserts that it did not know about a possible violation of federal securities laws. The organization considers listing approval of its shares in 2021 as the Commission’s vindication of its core activities—then and forever. In other words, Coinbase adopted the very same legal framework as the basis for listing decisions that, as it now contends, is not applicable to its activities», — according to a letter from SEC lawyers.

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Chief Legal Officer Paul Grewal saw in the agency’s response a ‘disregard’ of the organization’s arguments and ‘repetition’ of the same [charges].

The court will consider the arguments from both sides and decide in the coming days whether to proceed with the case.

6 июня SEC filed a civil complaint against Coinbase.

The Commission charged the company with unregistered securities offerings in the form of a number of tokens and the illegal combination of three functions—broker, exchange and clearing agency—functions normally kept separate in traditional markets. The regulator also targeted the Coinbase Earn staking program.

29 июня in response to the suit, the exchange accused the SEC of overreach. According to platform representatives, citing the Howey test, the assets listed in the complaint are not investment contracts and, therefore, cannot be equated with securities.

The company reminded that for many years it has complied with regulatory requirements and on multiple occasions requested direct SEC guidance on the enforcement of federal securities laws in relation to the digital asset industry.

The exchange refused to change its business model in response to the Commission’s suit.

Grewal called the regulator’s approach to regulating the crypto industry “undermining US competitiveness”.