There has been a major legal development as Judge Katherine Polk Failla rules that the U.S Securities and Exchange Commission (SEC) lawsuit against Coinbase will proceed. This ruling marks a turning point in the case because according to the judge, SEC’s allegations have sufficient basis.
According to reports from court filings on Wednesday, Judge Failla declined Coinbase’s request for dismissal of the case brought against it. However, she agreed with Coinbase about one thing that its crypto wallet service does not necessarily make it an unregistered broker-dealer. This means there will be full trial.
Meanwhile while more intense legal scrutiny awaits this lawsuit, the judge has summed up SEC’s argument. She believes that somehow Coinbase may have functioned as both exchange and broker without proper registration especially owing to its Staking Program which can involve unregistered securities.
A Mixed Reaction from Coinbase
Today, @coinbase filed our brief asking the Court to dismiss the SEC’s case against us. Our core argument is simple — we do not offer “investment contracts” as that term has been construed by decades of Supreme Court and other binding precedent. 1/3 https://t.co/r2EkDgkEuc
— paulgrewal.eth (@iampaulgrewal) August 4, 2023
Commenting on the court’s decision, Coinbase’s chief legal officer, Paul Grewal, appreciated the judge’s comprehension of Coinbase Wallet and stressed that it should not be mixed up with US securities laws. However, he pointed out that these kind of early motions against governmental organizations are often unsuccessful. Nevertheless, according to him, it is still an ongoing journey towards legal clarity.
The way this lawsuit will evolve will be watched closely as there are great implications for how digital assets are treated under U.S. law. This case is a defining moment for Coinbase and may shape the future of cryptocurrency industry.
