The United States Securities and Exchange Commission has filed a lawsuit against the largest cryptocurrency exchange platform in the United States, Coinbase, alleging that Coinbase violates the law by neglecting to register its company.
Coinbase has stated that it will ask a judge to reject the action.
In a letter that was submitted shortly before the stroke of midnight on Wednesday in the federal court in Manhattan, Coinbase stated that the SEC has the ability to prosecute civil claims since the assets that are traded on its platform are not “investment contracts,” and are thus not securities.
“The SEC can only pursue its claims if the tokens and staking services it has identified are’securities,'” Coinbase said in a statement. “That is not the case.”
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On Thursday, representatives of the SEC did not react promptly to requests for comment that were sent their way.
Coinbase sued by SEC on June 6, alleging that the company made billions of dollars serving as a middleman, including by trading at least 13 crypto assets or tokens, including as Solana, Cardano, and Polygon, that should have been registered as securities.
Coinbase sued by SEC as Additionally lawsuit was filed against Coinbase because of its “staking” program, in which the company pools cryptocurrency assets to sustain activity on the blockchain network in exchange for “rewards” that it delivers to consumers after taking commissions for itself.
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The case was filed just one day after the Securities and Exchange Commission (SEC) launched a lawsuit against Binance, the largest cryptocurrency exchange in the world, accusing it of lying about its operations, mishandling user cash, and exaggerating trading volumes.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has been attempting to exert jurisdiction over the cryptocurrency business, which he has stated undermines investor trust in the financial markets of the United States.
In a second document consisting of 177 pages, Coinbase denied the SEC’s substantive assertions. The company stated that it “welcomes regulation,” but that the regulator was trying to fill the “regulatory gap” over crypto assets arbitrarily and without the authorization of Congress. Coinbase said it “welcomes regulation.”
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“Agency enforcement authority is important but not boundless,” it wrote in the document. “The action taken by the SEC in this matter goes beyond those bounds and is unlawful.”
During afternoon trading on the Nasdaq, shares of Coinbase’s parent company, Coinbase Global, increased $1.58, which is equivalent to a 2.2% gain.
The case has been given the number 23-04738 and is being heard in the United States District Court for the Southern District of New York.
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