Coinbase is actively contesting the Securities and Exchange Commission’s (SEC) classification of secondary sales of crypto assets as “securities transactions” in its legal battle. In a letter to U.S. District Judge Katherine Failla, Coinbase’s attorney Michael Savitt urged the judge to disregard the previous judgment, arguing that the matter was not adequately examined in court and should hold “no weight.”
The dispute stems from a case initiated by the SEC in July 2022 against former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and their friend Sameer Ramani for insider trading involving nine cryptocurrencies. The defendants sought to dismiss the case, claiming the tokens were not “investment contracts” and thus outside the SEC’s jurisdiction. Coinbase supported this motion along with others.
However, before a decision could be reached, the SEC settled with the Wahi brothers in June 2023 in a “zero-dollar, no-admit-no-deny” agreement.
Coinbase and the SEC have engaged in legal debates over whether crypto assets traded on the platform meet the Howey test for securities. Following a hearing in January, Bloomberg’s senior litigation analyst Elliott Stein predicted a 70% chance of Coinbase securing a full dismissal in the lawsuit.
The SEC sued Coinbase in June 2023, alleging violations of federal securities laws by listing 13 tokens it deemed as “securities.” Coinbase is seeking an order to dismiss the case, questioning the SEC’s authority over crypto exchanges and aiming to clarify the regulatory landscape surrounding digital assets.
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