In the lawsuit with the United States Securities and Exchange Commission (SEC), Coinbase has filed a motion to dismiss the case. The motion comes after the previous announcement in which the CLO had hinted at the move.
On Friday, the exchange’s lawyers filed a motion with the U.S. District Court for the Southern District of New York seeking the dismissal. The motion claimed the SEC had “violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws” in asserting certain regulatory authority over the crypto exchange.
The exchange also drew comparison with the SEC versus Ripple case where the judge ruled that XRP largely did not qualify as a security by the commission’s existing standards.
Further, Coinbase’s filling disputed that transactions of the 12 tokens which the SEC classified under the definition of “investment contracts” as per the Howey Test. In the lawsuit from Coinbase, the exchange was operating as an unregistered broker, and argued the commission’s challenges to its staking program “fail as a matter of law.”
According to the sources, Coinbase has requested the court dismiss the case, arguing the agency’s enforcement action was “punitive” and represented an overreach in its authority granted by Congress.
The lawsuit from the exchange came months after the Wells Notice from March. After the notice, the exchange retaliated with a narrow legal action. To which the US Court of Appeals for the Third Circuit sent a notice to the SEC regarding the need for clear rules for trading digital assets.
However, even after all this, the SEC remained adamant and disregarded the need for regulations. It also denied Coinbase’s request and said it had no right to request regulatory clarity and that securities rules already exist. Simultaneously, citing its increasing enforcement actions, Coinbase called SEC’s approach highly harmful for the growth of the industry.
Initially, Coinbase had also shown signs of relocation due to the regulator’s behaviour. However, on Friday, Brian Armstrong, Coinbase CEO, wiped any such news and said that the exchange is not at all planning to leave US.