SEC Asserts Coinbase Misunderstands Howey Test, Misapplies Major Questions Doctrine
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The U.S. Securities and Exchange Commission (SEC) has responded to Coinbase’s latest filing regarding an ongoing lawsuit. The SEC rejected Coinbase’s arguments to dismiss the case and clarified its authority over securities laws.
It stated that Coinbase misunderstood the Howey test, which determines whether certain investments are considered securities. The SEC also criticized Coinbase’s use of the “major questions doctrine” in the case.
In simpler terms, the SEC asserts its power to regulate securities and states that Coinbase’s arguments are incorrect. The Howey test helps determine if something is a security, and the SEC believes Coinbase has misunderstood its application. The SEC also disagrees with Coinbase’s use of the “major questions doctrine” in this lawsuit.
SEC Responds to Coin Base’s Criticism and Defends Authority in Cryptocurrency Lawsuit
The U.S. Securities and Exchange Commission (SEC) has responded to Coinbase’s recent filing, where the exchange criticized the SEC’s actions in the cryptocurrency field. Coinbase is facing a lawsuit from the SEC for alleged violations of securities laws.
The SEC’s response aims to undermine Coinbase’s arguments and downplay the significance of the lawsuit. The SEC asserts its authority over securities cases, stating that it has the power to enforce statutory requirements granted by Congress in 1934. Coinbase disagrees, claiming that the SEC lacks the authority to regulate digital asset exchanges.
The SEC also addresses Coinbase’s criticism of the Howey test, a criteria used to determine if something is a security. Coinbase now questions the validity of the test, despite having used it for listing decisions in the past.
Conflict Between Coinbase and SEC Deepens, Causing Uncertainty in Crypto Industry
The SEC has accused Coinbase, a popular cryptocurrency exchange, of creating its own rules for determining whether certain assets are securities. Coinbase believes that for an asset to be considered a security, it must involve a formal contract and that this contract does not apply to secondary market sales.
However, the SEC disagrees with these criteria. They argue that Coinbase misinterprets the Howey test, which helps determine if transactions are subject to securities laws. The SEC criticized Coinbase’s approach and emphasized its authority to enforce securities laws.
Interestingly, the SEC chair, Gary Gensler, had previously stated that the agency lacked the power to regulate companies like Coinbase but later changed his stance. Coinbase’s Chief Legal Officer, Paul Grewal, expressed disappointment with the SEC’s filing, considering it to be more of the same disagreement between the two parties.
