Coinbase has filed a motion to dismiss the lawsuit by the Securities and Exchange Commission (SEC). In a court filing on June 28, the crypto exchange described the charges by the SEC as an “extraordinary abuse of process,” stating that it “violates Coinbase’s due process rights.”
According to the filing, Coinbase argues that the lawsuit from the Commission comes as a result of a change in its approach to regulating the crypto industry. Furthermore, the exchange giant asserted that in April 2021 the SEC approved its request to go public and sell its shares to millions of retail and institutional investors without advising that the firm must register its operation.
Coinbase pointed out that the discussion that led to the approval of its public listing went on for “years” without the SEC suggesting at any point that the firm must register its operations.
The exchange claims in its filing that the SEC’s “about-face” did not come as a product of legislative change, nor a change to Coinbase’s business since 2021; rather it comes as a change in the “SEC’s position regarding its powers.”
SEC’s accusation two years later
Two years after the SEC approved Coinbase’s move to go public, the Commission comes with a lawsuit claiming that the crypto exchange failed to register as a national securities exchange, broker, and clearing agency.
The SEC’s based its allegations on the grounds that out of the 240 tokens traded on the Coinbase exchange, 12 of them were securities. Meanwhile, Coinbase denied the allegation stating that six out of the 12 assets listed by the SEC as securities were already available on its spot trading prior to when the regulators approved the Company’s registration statement.
“The Commission grounds its suit in allegations that 12 of the more than 240 tokens traded on Coinbase’s spot exchange are “securities.” Six of these 12 assets were already on Coinbase when the SEC declared the Company’s registration statement effective. The SEC called none of them securities in 2021,” the filing reads.
Coinbase moves for case dismissal
The crypto exchange firm urged the court to dismiss the charges by the SEC on the grounds that it violates the company’s due process rights and constitutes an extraordinary abuse of process.
According to the filing, “even were the SEC correct that the assets and services it identifies are within the scope of its existing regulatory authority, this action must be dismissed on the independent grounds that it violates Coinbase’s due process rights and constitutes an extraordinary abuse of process.”
Finally, Coinbase also asks the court to dismiss the lawsuit permanently and grant judgment in its favor.