The ongoing lawsuit between the Securities Exchange Commission (SEC) and Coinbase has taken a new turn as the presiding judge reschedules the pretrial conference. Originally set for August 24, the conference has now been moved forward to July 13. This decision was made in response to a request by the SEC, which asked for a three-business day extension to respond to Coinbase’s motion to dismiss. The extension was granted by Judge Failla, allowing the SEC to file their response by July 7 instead of the initial July 3 deadline. However, this extension also resulted in the rescheduling of the pretrial conference.
Questions Raised by Coinbase
Coinbase, in their motion to dismiss the lawsuit, raised several important questions. One of these questions revolves around the SEC’s approval of the company’s Initial Public Offering (IPO) application, only to later file legal action against them. Additionally, Coinbase pointed out that six out of the twelve coins categorized as securities in the lawsuit were already listed on the exchange before the IPO went live in April 2021. This implies that the regulator was aware of these coins. Coinbase argued that the SEC’s actions were a violation of its due process rights and constituted “an extraordinary abuse of process.” The exchange also presented 11 defenses, including the lack of authority to regulate, the absence of securities trading on Coinbase spot exchange, and the argument that Coinbase Wallet does not constitute a broker arrangement.
Coinbase’s Possible Defense Strategies
CryptoSlate analyzed Coinbase’s potential defense strategies in collaboration with David Lopez-Kurtz, an attorney at Chicago-based Croke Fairchild Duarte & Beres LLC and the founder and CEO of BSL Group. One crucial point uncovered during this analysis relates to the appropriate registration of securities products, specifically Coinbase’s Form S-1 filing, which was submitted in February 2021. This process involves the SEC reviewing the form to ensure compliance with securities laws. Any necessary amendments are made before the form is declared “effective,” allowing the company to sell securities products. Lopez-Kurtz emphasized that the SEC was satisfied with the disclosures made in Coinbase’s Form S-1, which contradicts their current position that the company violated securities law.
SEC’s Legal Action Against Coinbase
The SEC initiated legal action against Coinbase on June 6, accusing the company of violating securities laws and engaging in inappropriate registration of its business. The allegations highlight the complexity of the case and the potential consequences for Coinbase. As the lawsuit progresses, both parties will have the opportunity to present their arguments and evidence during the pretrial conference. The rescheduled date of July 13 will provide the judge and attorneys with a chance to evaluate the case’s requirements for trial and establish deadlines for completing specific tasks.
In summary, the SEC and Coinbase lawsuit has taken a new turn with the rescheduling of the pretrial conference. Coinbase has raised questions regarding the SEC’s approval of its IPO application and the listing of certain coins on the exchange. The company argues that the SEC’s actions violated its due process rights and presents multiple defenses. Analysis of Coinbase’s defense strategies reveals the significance of appropriate registration of securities products. The SEC’s legal action against Coinbase highlights the complexity of the case and the potential consequences for the company. The rescheduled pretrial conference on July 13 will play a crucial role in determining the future course of the lawsuit.