Coinbase, a crypto exchange, is facing legal action from the US Securities and Exchange Commission (SEC) over its crypto trading and staking services. The SEC claims that Coinbase has violated federal securities laws by operating as an unregistered securities exchange, broker, and clearing agency since 2019.
The SEC also alleges that Coinbase has offered staking services for tokens that fall under the SEC’s jurisdiction without proper registration. Coinbase has denied these allegations and argued that many of the tokens in question are not securities. The court hearing for this case is set for July 13th.
Coinbase has Deployed an Interesting Strategy
Coinbase used a clever defense strategy to delay its first response to the US SEC by 40 days. The original deadline was the 7th of August, but Coinbase managed to push it back to the 16th of September. The SEC had to reply to Coinbase’s defense, but it asked for more time because of the 4th of July holiday. The court agreed to give the SEC until the 10th of July to respond.
Moreover, the court changed the type and date of the next meeting between the parties. Instead of a pre-trial conference on the 24th of August, there will be a pre-motion conference on the 1st of July. A pre-motion conference is a meeting where the judge and the lawyers discuss how to prepare for a possible trial and set deadlines for certain tasks.
In its defense, Coinbase argued that many of the tokens that the SEC accused it of illegally offering are not within the Commission’s jurisdiction.
The exchange claimed that the regulator had no grounds to proceed unless it could prove that the digital assets and services mentioned in the Complaint met the criteria of “investment contracts. This would imply that they fell under the definition of “securities” according to the Securities Act and the Exchange Act.
It sent its answer to the court 40 days before the deadline. MetaLawman, a lawyer and Twitter legal commentator said that this was a “creative strategy” by Coinbase. He said that “Coinbase seems to be trying to influence the Judge by showing documents that support its position through the Answer”.
