Coinbase asked a federal judge Friday to dismiss a lawsuit the Securities and Exchange Commission filed against it in June.
“Our core argument is simple — we do not offer ‘investment contracts’ as that term has been construed by decades of Supreme Court and other binding precedent,” Paul Grewal, Coinbase’s chief legal officer, tweeted Friday. “By ignoring that precedent, the SEC has violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws.”
Coinbase’s case was top of mind for several observers of the crypto space last month, when another federal judge ruled that fellow crypto firm Ripple’s token XRP is a security when it’s sold to institutional investors but not to the general public. The ruling gave both Ripple and the SEC a partial win.
However, Coinbase asserted the SEC “has trampled the strict boundaries on its basic authority set by Congress,” according to Grewal.
The SEC did not respond immediately to a request for comment Friday from Reuters.
The law, regarding crypto offerings’ status as securities (or not), is hardly cut and dried. Yet another federal judge on Monday ruled that the SEC could go forward with claims against Terraform Labs and its founder, Do Kwon, over claims related to sales made on exchanges. That marks a stark disagreement with the Ripple ruling.
Coinbase, for its part, showed its hand when the Ripple verdict was handed down.
“W for @ripple. W for the industry. W for the builders. W for a clear rulebook. W for updating the system,” the company tweeted last month, using a shorthand for “win.”
Coinbase has long accused the SEC of regulation by enforcement, and sued the agency in April to force it to divulge how it defines a security. The SEC sued Coinbase in June, accusing it of operating an unregistered national securities exchange, broker and clearing agency. The regulator also charged Coinbase with failing to register the offer and sale of its staking-as-a-service program.