Coinbase claims ‘more of the same’ after SEC once again refuses to engage

The SEC has responded to Coinbase, again, this time to say that it will oppose any motion brought forth by Coinbase seeking to dismiss the regulatory agency’s lawsuit. 

“But Coinbase’s own actions belie these grievances. Before becoming a publicly traded company, Coinbase itself relied on the very factors federal courts follow, as set forth by the Supreme Court in SEC v. W.J. Howey Co. to assess whether the sale of crypto assets on its platform would qualify as a transaction in securities. In other words, Coinbase adopted the very legal framework as a basis for making listing decisions that it now claims has no applicability to its activities,” the SEC said in its response letter. 

Coinbase’s chief legal officer Paul Grewal called the letter “more of the same” on Twitter and defended the use of the Howey Test in the company’s response.

“They ignore the plain requirement in the Supreme Court’s holding 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,” he wrote. 

The SEC reiterated its claim that Coinbase operates as an unregistered exchange — which is one of the key claims in its lawsuit filed against the crypto exchange — and claims that Coinbase is using “subterfuge” by repeatedly invoking “equity to justify its illegal conduct.”

In a June 29 filing, Coinbase argued that the SEC could not “retroactively” regulate digital asset exchanges and that the SEC was out of bounds for attempting to “seize power” in order to regulate cryptocurrencies. 

“In the face of such uncertainty, and lacking a mandate, regulators may not seize power for themselves. That is the province of the legislature,” Coinbase argued. 

A fact, Grewal tweeted, that the SEC ignored in its letter to the Court on Friday. 

“They ignore the clear and unmistakable warnings of the Supreme Court just last week against regulatory overreach in major questions reserved to Congress,” Grewal said. He had previously compared the Major Questions Doctrine to the SEC’s case against Coinbase. 

The SEC and Coinbase’s lawyers are scheduled to “meet and confer” on July 10, according to the court document filed on Friday.