Tuesday, the SEC requested that a federal judge reject Coinbase Global’s (COIN.O) request to have the regulator’s action against the cryptocurrency exchange dismissed.
The government said that Coinbase erred by relying on a recent court decision that determined cryptocurrency creator Ripple Labs Inc. did not break the law by trading its XRP coin on open markets, citing a later decision in the Terraform Labs case that contradicted the court’s justification.
The filing on Tuesday revealed that the SEC is using the Terraform Labs decision to cast doubt on the Ripple decision, which the cryptocurrency sector had hailed as a victory.
In June, the SEC filed a lawsuit against Coinbase, alleging that it had been functioning as a national securities exchange, broker, and clearing agency without being registered with the watchdog.
In August, Coinbase petitioned a federal court in Manhattan to dismiss the action on the grounds that the digital assets and services in question did not meet the criteria for securities and therefore the SEC had the right to do so.
“Coinbase does not here contest that it performed the duties of an exchange, broker, and clearing agency, with the exception of the Wallet application. Therefore, the Motion depends on whether Coinbase mediated financial transactions involving securities, or investment contracts. It did, according to the SEC’s filing.
In a tweet, Coinbase’s chief legal officer Paul Grewal referred to the SEC filing as “more of the same old same old.”The assets that we list on our platform are not securities and are not governed by the SEC, he declared.
Additional reporting by Jonathan Stempel; editing by Cynthia Osterman and Stephen Coates; writing by Hannah Lang in Washington and Chris Prentice in New York.