A pre-claims hearing scheduled for July 13 between the Securities and Exchange Commission (SEC) and cryptocurrency exchange Coinbase will discuss the atmosphere of the lawsuit and its potential impact on the broader crypto industry. A legal source told Cointelegraph.
The meeting, originally scheduled for August, is a typical request filed by parties seeking judgment on specific issues before trial. In this case, a motion was requested by Coinbase in late June. The exchange has asked Judge Catherine Polk Faira to dismiss the complaint filed by the regulator on June 5.
As the first public hearing between the parties, securities and regulatory attorney Mark Cornfield explained that the meeting is likely to be “procedural and administratively focused.” “Coinbase will attempt to position this lawsuit as a case ripe for early dismissal for a variety of reasons, including the fact that tokens are not securities under the Howie test, and the Commission has It also includes violating jurisdiction,” Cornfield added.
In its response to the July 7 motion, the SEC acknowledged potential securities law violations and said it was considering attempts to “ignore more than 75 years of control” under Howie. Including, he strongly criticized the exchange. “To build our own test of what constitutes an investment contract.”
Coinbase’s motion also mentions an initial public offering in 2021. According to the exchange, the SEC is now seeking indictments for activities that have been “thoroughly explained” to regulators and the public over the past few years.
Although the SEC was aware of Coinbase’s business activities, that allegation alone was not enough to win the case in court. Corporate and securities attorney Roland Chase said the federal securities laws governing the “listing” process are based on disclosure. “The SEC is only authorized by Congress to review publicly available documents, provide comments and ask questions in order to improve corporate disclosures to potential investors.” Chase told Cointelegraph.
Chase also noted that when Coinbase went public, it informed the SEC that it would subject each asset to a comprehensive legal analysis before allowing trading on the platform to prevent securities from trading. . “The SEC was ultimately satisfied with all of this disclosure and allowed Coinbase to go public,” he explained, adding, “The SEC now believes that Coinbase actually trades securities on its platform. In addition, we believe that we offer services that Coinbase provides,” he added. Proprietary Unregistered Securities. ”
Without an agreement between the parties, a case can take years to resolve. A famous example is Ripple’s legal battle, which has been going on since 2020, when the SEC also considered Ripple’s token XRP a security. In a recent video about the ongoing lawsuit, Ripple CEO Brad Garlinghouse said the SEC was “deliberately causing confusion about the rules and exploiting that confusion through enforcement.” Stated.
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