SEC’s Lawsuit Against Coinbase Should Proceed, Judge Rules

A significant legal development has emerged in the ongoing dispute between the U.S. Securities and Exchange Commission (SEC) and Coinbase, a leading cryptocurrency exchange. As reported by Bloomberg, a federal Judge in Manhattan has ruled that the SEC’s claims against Coinbase will proceed, rejecting the exchange’s motion to dismiss the case.

Judge Rejects Dismissal of SEC vs Coinbase Suit

The crux of the SEC’s allegations against Coinbase revolves around the exchange’s lending program, which the agency argues constitutes the offer and sale of unregistered securities. Coinbase had sought to have the case dismissed, contending that the lending program does not fall under the SEC’s jurisdiction.

However, Judge Katherine Polk Failla’s ruling indicates that the SEC’s claims have sufficient legal merit to warrant further examination. This development signals the continuation of legal proceedings and also underscores the potential ramifications for cryptocurrency exchanges operating in the United States.

Coinbase Charged For Securities Law Violations by SEC

Coinbase has faced a prolonged period of regulatory scrutiny and legal conflicts with United States regulators. Notably, Coinbase initiated its request last year by filing a lawsuit, seeking a court order that would compel the SEC to respond to its inquiry.

Later that same year, Coinbase sent a letter to the SEC, in which it alleged that the SEC had disregarded its call for the establishment of a regulatory framework for digital assets and had consistently avoided addressing Coinbase’s request for rulemaking. Meanwhile, the SEC charged the crypto firm for operating as an unregistered broker and exchange operator, thereby violating regulatory requirements.

Also, the regulators accused the exchange of selling investment contracts by staking customer assets, earning rewards on their behalf, and returning them. 

Bloomberg Analysts See Coinbase Winning

Earlier in the year, Bloomberg litigation analyst Elliott Stein expressed his confidence in Coinbase’s chances of victory in its lawsuit against the SEC. precisely, he predicted a 70% chance of Coinbase walking out of the courtroom with a victory when it is eventually time.

On one hand, Strain believes that the exchange provided a more detailed explanation of investment contracts compared to what the regulator presented and this was a turning point for Coinbase in the lawsuit.