The Securities and Exchange Commission’s extensive crackdown on cryptocurrencies has been a highlight, and Coinbase has not been spared from its impact. On June 6, the SEC filed a lawsuit against Coinbase, accusing the company of selling unregistered securities and operating as an unregistered securities exchange. However now, Coinbase is taking action to challenge and dismiss this lawsuit.
During a recent earnings call for the second quarter of 2023, Coinbase’s Chief Legal Officer, Paul Grewal, mentioned that the exchange plans to submit a motion seeking the court’s dismissal of the lawsuit. The company has consistently criticized and refuted the accusations made by the SEC in the past. He added,
“Tomorrow [Aug. 4] We will be moving the court for an order dismissing the case in its entirety.”
According to reports, the exchange intends to challenge its ‘securities listing’ allegations. As part of its defense, Coinbase will argue that the SEC lacks regulatory authority over cryptocurrency exchanges and never communicated any obligation to register when approving Coinbase’s registration statement back in April 2021. Further highlighting the significance of Aug. 4, Grewal tweeted,
Also Read: FTX Evades SEC Lawsuit While Binance and Coinbase Face Regulatory Heat
Coinbase remains optimistic
Grewal also shared that the exchange is optimistic about its chances of prevailing in the case. He expressed confidence by stating, “With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win.“
Additionally, the exchange believed that this legal process could lead to enhanced clarity throughout the industry. While Coinbase’s primary focus is on litigation, Grewal pointed out that it could also serve as a means to emphasize the significance of engaging with the SEC and the U.S. government in pursuit of regulatory clarity. He said,
“Regardless of any particular outcome on any motion or any court case, clarity itself is the goal. That’s how we define winning.”
It is worth mentioning that the SEC specifically advised Coinbase to suspend trading in all assets except for Bitcoin.
Furthermore, the SEC’s legal action had a noticeable impact on the cryptocurrency exchange. Coinbase’s fees generated from customers trading crypto on their platform declined by 13% compared to the previous quarter and by 50% compared to the same period last year, resulting in $327 million in sales, the lowest recorded since the end of 2022. This resulted in a net loss of $97 million, slightly higher than the net loss experienced in Q1 2023.
Also Read: All Crypto Assets Except Bitcoin Are Securities: SEC to Coinbase
