He US Securities and Exchange Commission has stated that coin base he was aware of a possible securities breach when he listed some cryptocurrencies.
in a recent presentationSEC lawyers criticized Coinbase’s argument that it was unaware of the violation of securities laws, noting that the largest US-based cryptocurrency exchange had sophisticated legal counsel.
“Coinbase, a multi-billion dollar entity advised by sophisticated legal counsel, argues that it was unaware that its conduct risked violating federal securities laws and suggests that by approving Coinbase’s 2021 registration statement, the SEC confirmed the legality of Coinbase’s underlying business activities—then and forever,” SEC lawyers wrote Judge Katherine Polk Failla of the Southern District Court of New York.
The commission added that Coinbase’s own actions contradict this argument.
Specifically, the SEC mentioned that the platform had warned shareholders multiple times about the risk that some of its supported cryptocurrencies could violate securities law.
“These actions clearly show that Coinbase understood that securities laws might apply to its conduct and knew what rules to consider when assessing the legality of its conduct.”
The SEC added that the central question before the court is whether Coinbase acted as an unregistered broker with respect to securities law.
In response to the SEC filing, Coinbase chief legal officer Paul Grewal said the allegations are “more of the same.”
“They ignore the simple requirement of the Supreme Court decision in Howey decades ago that an investment contract first and foremost requires enforceable rights against an issuer. It requires more than just an investment of money, etc.”
In a June 29 filing, Coinbase argued that the SEC could not “retroactively” regulate digital asset exchanges and that the SEC was off-limits to attempt to “seize power” to regulate cryptocurrencies.
“In the face of such uncertainty, and without a mandate, regulators may not seize power themselves. That is the province of the legislature,” Coinbase argued.
Coinbase Aims to Expand Outside of the US Amid Increasing Regulatory Scrutiny
Last month, the SEC sued Coinbase for selling unregistered securities and other alleged wrongdoing.
The commission also charged the exchange with illegally performing a variety of financial services, including trading in securities and failing to register as a stock exchange.
Following the SEC lawsuit, the largest US-based cryptocurrency exchange has also received Show Cause orders from 11 US states, requiring Coinbase to justify why it should not cease operations in the state.
However, cryptocurrency companies are not waiting for these cases to end. A large number of the largest and most important crypto companies in the US are already considering fleeing to friendlier countries.
Coinbase, for its part, has opened a new business in Bermuda and may launch an international exchange.
