June 21, 2024

Coinbase SEC Hearing Falls Short, According to Crypto Lawyer

The conflict between the United States Securities and Exchange Commission (SEC) and crypto exchange Coinbase persists, marked by a lackluster 5-hour hearing today, as reported by a crypto lawyer in attendance.

“There were no knockout blows delivered by either side and, frankly, not a lot of high points over the course of the 5 hour hearing,” he stated.

Extended Hearing in Coinbase vs. SEC Case

MetaLawMan, in a thread on X (formerly Twitter), informs his 32,200 followers about today’s lengthy court hearing. The hearing marks Coinbase’s attempt to dismiss the SEC’s charges against the crypto exchange.

“As expected, there was no ruling from the Judge.”

However, he noted that the debate over whether cryptos are a security came up. Both participants concurred that cryptocurrencies at their fundamental level are not deemed as securities. However, once traded on a crypto exchange such as Coinbase, they do fulfill the criteria for being classified as securities.

“There was a general consensus that tokens are not ‘in and of themselves securities’ but the SEC argued, nonetheless, that transactions of tokens on secondary trading platforms like Coinbase can still constitute sales of investment contracts.”

The lawyer emphasized that this time around, the US regulator was more prepared for its case. In comparison to the mid-2023 hearing against Coinbase when they were caught off guard.

“The SEC lawyers were better prepared than when they were caught flat footed in July and were generally effective making their case,” he further stated.

In August 2023, Coinbase petitioned the federal court to dismiss the lawsuit. This came shortly after Ripple achieved a partial victory against the SEC.

On July 13, Judge Analisa Torres in the Southern District of New York declared that XRP was not deemed a security when traded on exchanges.

Read more: Who Is Brian Armstrong? A Deep Dive Into the Coinbase Founder

Coinbase Seeks to Dismiss Lawsuit Over Extended Period

Coinbase has been vying to have the lawsuit thrown out for some time now.

In June 2023, The SEC filed lawsuits against Coinbase and Binance for offering unregistered securities and violating business registration requirements. 

However, the share price decline indicated a drop in investor sentiment.

Coinbase’s share of US crypto trading volumes fell from 62% in January to 51% on June 18. From March to June 2023, Binance.US, the American arm of the global exchange, witnessed its market share decline to about 1.15%.

The SEC’s case rests on the claim that Coinbase’s token and staking services are securities.

However, Coinbase argues they are not, criticizing what it calls the “fundamental problem” with this case. Meanwhile, if it is dismissed, it could open the floodgates to more clarity within the industry.

In more recent news, amid the legal battle, Coinbase’s chief legal officer offered the SEC assistance to SEC following its X account being compromised last week.

The breached account triggered a premature statement suggesting the regulator’s approval of all spot Bitcoin exchange-traded fund (ETF) applications. However, the official announcement from the regulator was only made a day later, on January 11.

“The entire Coinbase team offers its help. We are committed to doing our part to ensure fair, orderly, and efficient markets for all Americans.”

Read more: MetaMask vs. Coinbase Wallet: A Comparison and Analysis


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