In the ongoing legal battle between the United States Securities and Exchange Commission (SEC) and Coinbase, a lawmaker along with several crypto lobbying organisations and a group of professors sided with the exchange. The dignitaries called the court to dismiss the SEC lawsuit.
On Friday, the entities led by Senator Cynthia Lummis, filed an amicus brief in the federal court. Reportedly, the lobby organizations including the Blockchain Association, Crypto Council for Innovation, Chamber of Digital Commerce, DeFi Education Fund, Chamber of Progress, Consumer Technology Association, venture firms like Andreessen Horowitz and Paradigm and half a dozen academics filed a total of six briefs, not including the Senator’s.
In the filing, organizations and lawmaker alleged the SEC was trying to exceed its authority in bringing a lawsuit against several crypto exchanges. The SEC lawsuits allege that crypto trading platforms like Coinbase are simultaneously unregistered securities exchanges, brokers and clearinghouses trading similarly unregistered securities in the form of crypto assets. This referred to SEC’s lawsuits against Coinbase and Binance from early June.
The amicus briefs, addressed to Judge Katherine Polk Failla, of the U.S. District Court for the Southern District of New York, align with the arguments of Coinbase in the recent motion to dismiss the case.
As reported by Todayq News, last 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. In the brief, Lummis stated:
Through this case the SEC seeks primary influence over economic, political, and legal questions under active consideration by Congress and multiple agencies.
Sources reveal that the amicus brief highlights two major points which are listed below:
(i) the important questions implicated here, which are properly before Congress right now
(ii) the fundamental separation-of-powers principles that weigh strongly in favor of deferring to Congress rather than adopting the SEC’s novel and expansive view of its own authority.
Furthermore, the brief refers to the recent regulatory framework proposed by the lawmakers including the one proposed by Lummis herself. She added the example of law proposed by her in collaboration with Senator Kirsten Gillibrand (D-N.Y.) which lays out where the SEC’s jurisdiction lies, and where its sister regulator, the Commodity Futures Trading Commission (CFTC), may take over.
Each of these bills recognizes that the crypto industry does not fit entirely within existing securities laws and transcends the current statutory powers of the SEC. The multitude of interests at stake require a holistic approach beyond the scope of a single agency, including approaches taken around the world. Congress is attuned to these important considerations.
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.