According to the SEC, Coinbase was aware of securities law violations and even warned some of its shareholders about the risk.
SEC Claps Back At Coinbase
The United States Securities and Exchange Commission (SEC) has finally responded to Coinbase’s claims that the former lacks the jurisdiction to regulate the crypto exchange’s activities.
It all started on June 6, 2023, when the US regulatory body filed charges against Coinbase, claiming that the crypto exchange had offered investors unregistered securities since 2019. The “unregistered securities,” in this case, were several cryptocurrencies.
In the SEC’s recent letter, the organization addressed a district judge and argued that Coinbase, as a “multi-billion-dollar entity advised by sophisticated legal counsel,” intentionally disregarded decades of established legal precedent, specifically the landmark Howey test, in an attempt to create its own criteria for determining what constitutes an investment contract.
Coinbase Acknowledged Securities Law?
The response from the SEC highlighted Coinbase’s own acknowledgment of the risk that assets traded on its platform could be classified as securities. The regulator quoted from Coinbase’s public statements since becoming a publicly traded company, emphasizing that the company had consistently informed shareholders about the potential violation of federal securities laws resulting from its conduct.
The SEC also presented evidence that the crypto firm was well aware of the federal securities laws and how they could be applied to the exchange’s activities. The letter also claimed that the Coinbase team had even gone as far as communicating the potential securities laws violations and the associated risks to its shareholders.
An excerpt from the letter reads.
“Since becoming a public company, Coinbase has repeatedly informed its shareholders of the risk that the crypto assets traded on its platform could be deemed securities and therefore that its conduct could violate the federal securities laws.”
Coinbase Claims Lack Of Jurisdiction
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Author: Amara Khatri
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