Cryptocurrency exchange Coinbase is filing a motion to dismiss the Securities and Exchange Commission’s (SEC) lawsuit. Attorneys for the company argue that the plaintiff has no legal basis for the lawsuit and the agency is overstepping its authority.
Lawyers for cryptocurrency exchange Coinbase filed a motion in the U.S. District Court for the Southern District of New York asking for dismissing the lawsuit the SEC filed against the company earlier this month.
The legal document states that the SEC is exceeding its legal authority and misrepresenting its interpretation of the U.S. Securities Act. Coinbase attorneys argue that the regulator simply has no legal basis for filing such a lawsuit.
Coinbase’s motion also states that even if the assets the regulator has included in the lawsuit as unregistered securities are actually securities, the SEC still cannot commence such a lawsuit because they do not fall within the regulator’s existing authority. The whole point is that the SEC continues to define securities based on the Howey test, i.e., claiming the existence of an investment contract. However, the tokens named in the regulator’s lawsuit cannot be attributed to any of the items in the test.
According to Paul Grewal, Chief Legal Officer at Coinbase, the SEC has no authority to file such lawsuits based only on allegations that deviate significantly from the existing legal framework. In his opinion, the SEC is violating Coinbase’s due process rights by abusing procedural rules.
The SEC accused Coinbase of unregistered trading in 12 digital tokens, calling them securities. The company was the second crypto-exchange after Binance, against which the regulator had filed similar lawsuits this month.
