The tussle between the US Securities and Exchange Commission (SEC) and cryptocurrency exchange Coinbase is still ongoing, and was marked by a lackluster 5-hour hearing today, according to one of the cryptocurrency lawyers in attendance.
“There were no knockdowns from either side and, frankly, not a lot of high points over the course of the five-hour hearing,” he said.
Expanded hearing in Coinbase vs. SEC case
MetaLawMan, in a series of tweets on X (formerly Twitter), informs his 32,200 followers about today's lengthy court hearing. The hearing represents Coinbase's attempt to dismiss the SEC's charges against the cryptocurrency exchange.
“As expected, there was no ruling from the judge.”
However, he noted that controversy has arisen over whether cryptocurrencies constitute securities. Both participants agreed that cryptocurrencies at their fundamental level are not considered securities. However, once they are traded on a cryptocurrency exchange like Coinbase, they meet the criteria to be classified as securities.
“There has been a general consensus that tokens are not ‘per se securities,’ but the SEC has argued, however, that token transactions on secondary trading platforms such as Coinbase still constitute investment contract sales.”
The lawyer stressed that this time the US regulatory body was more prepared for its case. Compared to the hearing held in mid-2023 against Coinbase when they were taken by surprise.
“SEC lawyers were better prepared than they were when they defaulted in July and were generally effective in making their case,” he added.
In August 2023, Coinbase filed a motion in federal court to dismiss the lawsuit. This came shortly after Ripple achieved a partial victory over the Securities and Exchange Commission.
On July 13, Judge Analisa Torres in the Southern District of New York declared that XRP is not considered a security when traded on exchanges.
Read More: Who is Brian Armstrong? A deep dive into the founder of Coinbase
Coinbase is seeking to have the lawsuit dismissed over an extended period
Coinbase has been fighting to get the lawsuit dismissed for some time.
In June 2023, the SEC filed lawsuits against Coinbase and Binance for offering unregistered securities and violating business registration requirements.
However, a falling stock price indicates low investor sentiment.
Coinbase's share of US cryptocurrency trading volumes fell from 62% in January to 51% on June 18. From March to June 2023, Binance.US, the US arm of the global exchange, saw its market share fall to about 1.15%.
The SEC's case relies on the claim that Coinbase's token services and shares are securities.
However, Coinbase argues that it is not, criticizing what it calls the “fundamental problem” with the issue. Meanwhile, if rejected, it could open the door to greater clarity within the industry.
In more recent news, amid the legal battle, Coinbase's chief legal officer has offered to help the SEC after its X account was hacked last week.
The hacked account led to a premature statement indicating that the regulator has approved all Bitcoin exchange-traded fund (ETF) applications. However, the official announcement from the regulatory body was made just one day later, on January 11.
“The entire Coinbase team is offering its assistance. We are committed to doing our part to ensure fair, orderly, and efficient markets for all Americans.
Read more: MetaMask vs Coinbase Wallet: Comparison and Analysis
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