The regulatory body has petitioned a federal judge to reject Coinbase’s plea for dismissal in its lawsuit, contending that the cryptocurrency platform was aware that the digital assets it offered were classified as securities according to the Howey test. The United States Securities and Exchange Commission (SEC) has submitted a filing to a federal judge, opposing Coinbase’s request for the dismissal of the regulator’s lawsuit. In a filing dated October 3rd, filed in a New York District Court, the SEC responded to Coinbase’s motion to dismiss and reiterated its belief that certain cryptocurrencies listed on the platform qualify as investment contracts under the Howey Test and are thus subject to SEC registration. “The issuer of each cryptocurrency actively encouraged investors, including those on Coinbase’s platform, to reasonably expect an increase in the value of their investments based on the widely disseminated plan to develop and sustain the asset’s value,” stated the SEC. The SEC alleged that Coinbase has been aware from the outset that cryptocurrencies it offers may be considered securities if they meet the Howey Test, and it claimed that Coinbase acknowledged this in its submissions to the SEC. The regulator also refuted Coinbase’s argument invoking the “major questions doctrine,” which asserted that the SEC lacks authority over the cryptocurrency market until Congress explicitly grants it. “The SEC has not assumed any new authority beyond what the federal securities laws already explicitly authorize it to do,” asserted the SEC. In an October 3rd tweet, Coinbase’s Chief Legal Officer, Paul Grewal, characterized the SEC’s arguments as “more of the same old, same old” and insisted that the assets listed on the platform “are not securities and fall outside the SEC’s jurisdiction.” Grewal argued that the SEC’s response would imply that “everything from Pokémon cards to stamps to Swiftie bracelets” could also be classified as securities. Miles Jennings, General Counsel for a16z Crypto, claimed in a subsequent post that the SEC’s motion “has numerous flaws.” Jennings further contended that even if the court were to accept the regulator’s primary argument concerning investment contracts, the case “should still be dismissed,” as he believed the SEC’s definition of an investment contract was “excessively broad.”
