The exchanges of accusations between the SEC and Coinbase continue. Federal Judge Katherine Polk Failla said she was concerned about the term “securities” and urged the SEC to “expand the definition of a security.” The cryptocurrency ecosystem has complained that the Securities Law dates back to 1933, which would be insufficient to define a “value.”
In the latest hearing between the Coinbase exchange and a federal judge in New York, the latter urged the United States Securities and Exchange Commission (SEC) to once again clarify its definition of securities.
Federal Judge Katherine Polk Failla held private meetings with Coinbase and representatives of the SEC, with whom she emphasized the legal precedents to define a value, as well as the taxes that cryptocurrencies traded on exchanges must have.
Coinbase Case: US Federal Judge Asks the SEC to Expand Definition of “Security”
Coinbase continues its legal battle to try to dismiss the lawsuit filed by the SEC, which has argued for months that the exchange is violating securities laws. The federal judge is still “weighing” some questions for the regulator.
Last December, Coinbase sued the SEC over its refusal to disclose its actions for clearer regulation of cryptocurrencies. Coinbase Chief Legal Officer (CLO), Paul Grewal, has accused the SEC of “capricious” behavior and unlawful abuse of discretion in violating the Administrative Procedure Act.
The judge would have questioned the following from the SEC: “I am concerned… that what they are asking is to expand the definition of what constitutes a security.”
According to Reuters, the SEC until before Gary Gensler had only focused on companies that sold digital tokens, but now it does so with companies that offer commercial trading platforms and clearing activities that act similar to stockbrokers.
Coinbase Could End the SEC’s War on Exchanges
However, the ecosystem has accused that the Securities Law dates back to 1933, which would be insufficient to define a “value.” For its part, Coinbase has argued that cryptocurrencies, unlike stocks, do not meet the definition of an “investment contract.”
Yesterday, Grewal posted the following on X:
“Today we made arguments in our motion to bounce the SEC’s suit against Coinbase. After hours and hours, this much remain clear: the SEC continues to claim broad authority over all investments while offering no limiting principle to its definition of investment contract.”
For the SEC, cryptocurrency buyers were purchasing the tokens as investments similar to stocks or bonds, while Coinbase has maintained that buyers were not signing contracts that gave them the right to the income of a publicly traded company.
Last year, the SEC sued Coinbase and Binance for regulatory violations and acting as unregistered brokers, in addition to having “securities” listed. Since then, the regulator believes that Coinbase’s flagship services (main brokerage, exchange and staking programs) violate securities regulations.
Coinbase Insists on Dismissing SEC Lawsuit
Coinbase lawyer William Savitt said: “I’ll tell you this: I think it would have been a huge surprise to find out that an investment contract had nothing to do with a contract.”
Among the cryptocurrencies declared as securities by the SEC, the following stand out: Ripple (XRP), Telegram Gram (TON), LBRY Credits (LBC), OmiseGo (OMG), DASH (DASH), Algorand (ALGO), Naga (NGC) , Monolith (TKN), IHT Real Estate (IHT), Power Ledger (POWR), Kromatica (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT). DerivaDAO (DDX), XYO Network (XYO), Liechtenstein Cryptoasset Exchange (LCX), Kin (KIN), Salt Lending (SALT), Beaxy Token (BXY), DragonChain (DRGN), Tron (TRX), BitTorrent (BTT).
By Leonardo Perez
