Coinbase's motion to dismiss the US SEC's lawsuit against it was rejected, and the SEC was able to move forward with the lawsuit against Coinbase. US District Judge Kathleen Failla not only believes that most of the SEC's charges against Coinbase are suitable for trial, but also supports the SEC's long-held view on cryptocurrencies that many tokenized assets constitute securities.
The price of Bitcoin experienced a rollercoaster ride on Wednesday, reaching a high of close to $72,000, but then fell below $69,000.
On Tuesday, the net inflow of cash from spot Bitcoin ETF funds soared to the highest level in two weeks, reaching more than $417 million. This ignited sentiment in the coin industry and boosted the rise of Bitcoin.
However, digital currency exchanges$Coinbase (COIN.US)$The legal problems they faced later dampened investors' enthusiasm and caused Bitcoin to fall. On Wednesday morning EST, the news showed that Coinbase's motion to dismiss the US Securities and Exchange Commission (SEC) lawsuit against it was rejected, and the SEC was able to continue the lawsuit against Coinbase as the regulator.
According to court documents dated March 27, US District Judge Katherine Failla made the above ruling. The SEC alleges that Coinbase operates as an unregistered exchange, broker, and clearing house.
The judge wrote:
The court found that the US SEC has fully stated that Coinbase operates as an exchange, broker, and clearing agency under federal securities laws and engages in unregistered securities issuance and sale activities through its pledge program.
The term cryptocurrency may have only recently appeared, but the contested transaction fits perfectly with the framework the courts have used to identify securities for nearly 80 years.
The US SEC sued Coinbase in June 2023, alleging that it violated federal securities laws by listing 13 tokens considered securities.
The analysis points out that the latest ruling is important to the cryptocurrency community:
A ruling to dismiss a motion, such as Wednesday's ruling, is not a final ruling on a factual dispute. When evaluating such motions, even assuming that all of the plaintiff's allegations are true, a federal judge will only dismiss the case if there is no credible evidence that the law has been violated.
However, in Wednesday's ruling, US District Judge Kathleen Failla not only believed that most of the SEC's charges against Coinbase were suitable for trial, but also expressed support for the SEC's long-standing view on cryptocurrencies, that is, many tokenized assets constitute securities and fall within the scope of US SEC supervision.
Nor is it all bad news for Coinbase, and the company also had a small victory. The judge dismissed the US SEC's allegation that Coinbase acted as an unregistered broker through its wallet app.
In August of last year, Grayscale won a key lawsuit against the US SEC. The Washington DC Circuit Court of Appeals ruled in the ruling that the SEC approved the decision to approve a Bitcoin futures ETF, while rejecting Grayscale's decision to convert GBTC to a spot Bitcoin ETF was “arbitrary and capricious.” The court's ruling kicked off a sharp rise in cryptocurrencies, as people speculated that the US SEC would eventually have to make compromises to give the green light to the growing demand for spot Bitcoin ETFs. This is indeed the case.
The US SEC did not go well in its confrontation with the currency industry. When the Bitcoin ETF listing was approved, SEC Chairman Gary Gensler said that the court ruling last year forced the SEC to make changes and finally approved the listing of spot Bitcoin ETFs. This case against Coinbase may be a turning point for the SEC's crackdown on digital currencies.
Editor/Somer