Judge Rules SEC Lawsuit Against Coinbase Can Go to Trial
A judge ruled Wednesday (March 27) that the Securities and Exchange Commission’s lawsuit against Coinbase can go before a jury trial.
The decision came after Coinbase asked the court to dismiss the SEC’s complaint, CNBC reported Wednesday.
The SEC’s suit, which was filed in June, alleges that Coinbase was acting as an unregistered broker and exchange and demands that the company be stopped from doing so, according to the report.
“[T]he court finds that the SEC adequately alleges that Coinbase, through its staking program, engaged in the unregistered offer and sale of securities,” U.S. District Judge Katherine Polk Failla wrote in her ruling.
In the same ruling, the judge dismissed another of the SEC’s claims: that Coinbase acted as an unregistered broker by offering its wallet application, per the report.
Commenting on the two elements of the court’s ruling, Coinbase Chief Legal Officer Paul Grewal said in a Wednesday post on X, formerly known as Twitter: “We were prepared for this, and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation.”
In subsequent posts, Grewal said that early motions like Coinbase’s against a government agency are almost always denied, that Coinbase encourages the U.S. Congress to advance comprehensive digital assets legislation, and that the company appreciates the court’s ruling that innovations like Coinbase Wallet “do not and cannot implicate U.S. securities laws.”
“Looking ahead, we remain confident in our legal arguments, we look forward to proving we’re right, we are eager for the opportunity to take discovery from the SEC for the first time, and we appreciate the court’s continued consideration of our case,” Grewal said in another post on X.
The SEC filed its lawsuit on June 6, claiming Coinbase was letting its users trade unregistered securities. It charged Coinbase with operating as an unregistered national securities exchange, broker and clearing agency, and it took aim at the company’s failure to register the offer and sale of its crypto asset Staking-as-a-Service program with the agency.
On June 28, Coinbase sought dismissal of the SEC’s lawsuit, arguing that the regulator does not have the authority to pursue its prosecution of the company because the tokens and staking services are not securities.
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