SEC Accuses Coinbase of Deliberate Violation of the Law

The SEC has filed a civil lawsuit against Coinbase for allegedly offering unregistered securities in the form of certain tokens, and combining three functions as broker, exchange, and clearing agency that are usually separate.

Coinbase responded by asserting that, according to the “Howey Test,” the assets being targeted are not investment contracts and therefore cannot be equated as securities.

Further, the exchange has stood by its claim that it has followed regulatory requirements and has repeatedly requested direct advice from the SEC concerning the enforcement of federal securities laws in the digital asset industry.

Paul Grewal, General Counsel at Coinbase, has also voiced his disagreement and referred to the agency’s approach as “undermining US competitiveness.”

The SEC lawyers then questioned the correctness of Coinbase’s statements and the court will consider the arguments of both sides and decide on the possibility of carrying on the case in the near future.