Are Coinbase Shares Worth Adding to Portfolio?

• The US SEC has been given the required extension to respond to SEC’s defense on July 13.
• The market regulator has been aggressive in suing crypto firms thus far this year.

The ongoing legal feud between the United States Securities and Exchange Commission (SEC) and Coinbase Global Inc is shaping up with the markets regulator, on July 13, which will be presenting its response to the defense motion filed by the trading platform. This response is with respect to the lawsuit filed against the firm for supporting the trading of unregistered investment contracts.

The SEC had requested the court to grant it a three-day extension so as to allow it to have adequate time to respond to the defense appropriately. The request for extension was also approved by Coinbase and Judge Katherine Polk Failla set the new date for July 13. 

Besides this, the pre-trial conference was rescheduled to a pre-motion conference and is slated to take place on July 13 at 2 pm UTC. Before this rescheduled date, the pre-trial conference was slated to hold on August 24. Pre-trials are a demand from either party to the lawsuit that will pray the court to rule on a specific matter.

The current legal battle between the SEC and Coinbase appears to be moving at a breakneck speed, a development that might save all parties financially in the long run. While industry leaders have agreed Coinbase has a good defense seeing it has been requesting regulatory clarity for a long, stacking up Coinbase shares might prove to be a high-risk high-reward venture in the long term.

SEC and the Crackdowns on Crypto Firms

The SEC has been antagonistic to crypto platforms thus far this year with bouts of enforcement actions carried out and targeted at some of the biggest names in the industry. The first culprit was Kraken Exchange whom the SEC sued for offering its staking product as an unregistered security.

The lawsuit died down fast as both parties reached a settlement where the trading firm paid the sum of $30 million in civil charges. The most publicized of these lawsuits include those levied against Binance Exchange and Coinbase a few weeks ago, an indication that the biggest trading platforms are not immune from the regulator’s snare.

The SEC’s allegations against both firms are different but have a common theme – the support of unregistered securities. Some of the digital currencies christened by the market regulator as security include Cardano (ADA), Solana (SOL), Polygon (MATIC), Filecoin (FIL), and Decentraland (MANA) amongst others.

Rather than explore a settlement option as Kraken did, both exchanges have revealed their plans to defend themselves in court against what industry leaders have tagged the SEC’s gross overreach. In fact, Coinbase CEO, Brian Armstrong said that the firm is prepared to stand as the representative of the industry in Court.

More Lawsuits to Come?

The SEC now has three active lawsuits against crypto firms including Ripple Labs, Coinbase, and Binance. It remains unclear whether or not the market regulator will bring an enforcement action against Paxos Trust whom it issued a Wells Notice earlier in the year.

From precedents, the SEC may be building its case and it will not come as a surprise if more lawsuits are filed in the long term.

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