Coinbase to file order seeking dismissal of SEC lawsuit

Coinbase plans to file an order seeking dismissal of the lawsuit by the Securities and Exchange Commission on Aug. 4, with the crypto exchange’s legal chief saying it expects to win the case.

On its Aug. 3 second-quarter 2023 earnings call, Coinbase chief legal officer Paul Grewal expressed confidence the exchange would win the court case brought by the regulator.

“With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win.”

The SEC sued the exchange on June 6 alleging it sold unregistered securities and operated as an unregistered securities exchange. Grewal said Coinbase will file a motion asking the court to dismiss the lawsuit on Aug. 4.

“Tomorrow […] We will be moving the court for an order dismissing the case in its entirety.”

Grewal said it will argue that Coinbase did not list securities on its platform, that the SEC has no regulatory authority over crypto exchanges and it never suggested to Coinbase there was a requirement to register when it declared Coinbase’s registration statement effective in April 2021.

He expects the brief laying out its arguments will be fully submitted and considered by the court at the end of October.

“Our goal across not just the litigation, but all of our efforts engaging with the SEC and engaging with the U.S. government as a whole is to achieve regulatory clarity,” Grewal said.

“The reason why we are so focused on pushing for regulatory clarity here in the U.S. is that at present, under the status quo, we have very conflicting messages about what the law provides,” said Grewal.

He gave the example of conflicting statements from SEC chair Gary Gensler and CFTC chair Rostin Behnam on the legal status of Ether (ETH).

6/13/23, Ltr to the 3d Circuit: “The Commission has not yet decided what action to take on that petition.”

Today: “We can get to crypto later.”

Is there any serious question that a decision was made to deny sensible rules but deliberately withheld from the public?…

— paulgrewal.eth (@iampaulgrewal) August 3, 2023

Behnam said in a March Senate hearing that ETH was a commodity while Gensler has previously stated all cryptocurrencies besides Bitcoin (BTC) are a security.

Many of the laws currently applicable to the space “were written well before the internet even existed,” Grewal added.