Coinbase CLO wants case with the US SEC left to Congress

Coinbase exchange’s case against the US Securities and Exchange Commission (SEC) is on, with the presiding judge, Katherine Polk Failla trying to determine whether securities law applies to listings. The ruling will depend on whether the transactions in any of the twelve cryptocurrency tokens should be classified as an unregistered security.

Also Read: Coinbase to challenge SEC’s ‘abdication of duty’ after financial regulator denies of petition for crypto rules

Coinbase seeks to throw SEC’s case that its breaking the law

In December, Coinbase had declared commitment to challenge the SEC’s abdication of duty after the financial regulator denied petition for cryptocurrency rules.  Among the reasons for the denial, according to a statement by SEC chair Gary Gensler, include:

• There being existing laws and regulations already, which apply to the crypto securities markets.
• That the SEC addresses the crypto securities markets through rulemaking as well.
• It is important to maintain Commission discretion regarding rulemaking priorities.

Fast forward to Wednesday, January 17, the two parties appeared in court before Judge Failla, with the SEC pushing that Coinbase had broken securities laws. On the other desk, Coinbase lawyers defended that the said tokens were secondary-market trades with no contract in place, meaning they could not be securities.

The presentations by the plaintiff and the defendant culminated in Judge Failla deciding against making a decision from the bench. Her decision is expected in the coming weeks.

Coinbase CLO calls out the SEC

In a recent post on X, Coinbase chief legal officer (CLO) Paul Grewal has called out the SEC for continually claiming broad authority over all investments while offering no limiting principle to its definition of an investment contract.

According to the Coinbase executive, the SEC is unable to “unilaterally expand and redefine its own regulatory ambit”. With this, Grewal wants the matter to be left to Congress, including the ongoing legislative discussions about regulatory frameworks that are currently taking place.

The Coinbase CLO also articulated, “Coinbase does not offer securities,” reassuring confidence in the company’s legal arguments while expressing optimism for a decision that will bring much needed clarity to the industry.