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Highlights
- A Federal Court denied Coinbase's motion to dismiss the SEC case.
- Coinbase Wallet is not in violation of federal laws.
- Both parties are to submit the proposed case management plan before April 19.
A United States Court has set aside Coinbase motion to dismiss the Securities and Exchange Commission’s lawsuit against the platform.
In a March 27 ruling, a Federal court in Manhattan gave a go-ahead to the case and struck out claims against Coinbase Wallet sparking debates along crypto community lines. According to court documents, Judge Katherine Failla stated that the Commission has sufficiently pleaded that Coinbase operates as an exchange, broker, and clearing agency under Federal Law.
Furthermore, Judge Failla also addresses the Staking Program and the issue of the offer and sale of unregistered securities. The court’s decision means the lawsuit will move forward to discovery. With the case going forward, Coinbase will rely on its legal arguments as the SEC alleges that it operates as an unregistered broker amongst other issues.
Coinbase Wallet Did Not Violate Laws
The court dismissed the part of the suit relating to the Coinbase Wallet acting as an unregistered brokerage. The ruling was to the effect that Coinbase didn’t act as a brokerage although some tokens met certain criteria of an investment contract.
Finally, the court instructed both parties to submit a case management plan before April 19. Last year, the SEC sued Coinbase and Binance for offering trading services to unregistered securities among other charges. Coinbase stressed the argument vowing to defend itself and seek regulatory clarity for the market.
The regulation-by-court approach by the financial regulator has led industry executives and the digital asset community to lambast the Commission driving web3 investment out of the country.
Paul Grewal Stresses Regulatory Clarity
Paul Grewal, Coinbase’s Chief Legal Officer reacted to the decision on X (formerly Twitter) expressing commitment to the lawsuit and seeking rule clarity.
“Today, the Court decided that our SEC case will move forward on most of the claims, but dismissed the claims against Coinbase Wallet. We were prepared for this, and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation.”
According to Grewal, clarity is the ultimate goal while encouraging Congress to build momentum in crypto regulation of progress that will be made in the United States web3 sector. He added that the exchange remains confident in its argument and eager for the opportunity to take discovery from the financial regulator.
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