The US judge Failla has rejected Coinbase’s motion to dismiss the lawsuit brought by the SEC against the exchange: the legal battle can continue.
On March 27th, Coinbase’s attempt to have the SEC’s lawsuit dismissed was rejected by Judge Katherine Polk Failla, who found most of the SEC’s claims valid. This decision allows the commission to continue its case against the exchange.
Last June, the SEC sued the exchange, accusing it of facilitating the sale and exchange of unregistered securities. During the court hearing, Judge Failla extended this accusation to Coinbase’s staking service, emphasizing that customers’ use of the service could be considered an investment contract, as customers rely on Coinbase’s managerial efforts to obtain a profit.
The judge also ruled that the SEC failed to demonstrate that Coinbase engaged in brokerage activities through the Coinbase Wallet application, which gives users full control of their assets.
Paul Grewal, Chief Legal Officer of Coinbase, downplayed the significance of the decision, emphasizing that Coinbase is confident in its arguments and ready to defend them in court:
“We were prepared for this, and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation.”
Now that the case will go to trial, it will be a jury to decide the future of Coinbase and not a judge.
Snowden’s opinion
The decision of the Southern District Court of New York has elicited a response from Edward Snowden, who commented on X:
