Crypto exchange Coinbase and the United States Securities and Exchange Commission (SEC) will appear in court for a hearing that will determine the next steps in the case.
On Jan. 17 at 10 am ET (3 pm UTC), a court in New York is expected to hear oral arguments on Coinbase’s motion to dismiss the SEC’s lawsuit against the exchange. The SEC sued Coinbase on June 6, 2023, alleging that the cryptocurrency exchange violated federal securities laws.
The agency argued that 13 tokens listed on Coinbase were securities, including coins like Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), NEAR (NEAR), Voyager (VGX), Dash (DASH) and Nexo (NEXO).
According to Jeremy Hogan, partner at Hogan and Hogan, motions to dismiss “are rarely granted,” however, district judge Katherine Polk Failla has a background in dismissing crypto cases. She granted a motion to dismiss a case against Uniswap for allegedly selling “scam tokens” back in 2013.
Coinbase is seeking an order to drop the case, questioning the SEC's authority over crypto exchanges and noting that the regulator never suggested a requirement to register as a securities exchange when it approved Coinbase’s registration statement in April 2021. According to Hogan, Coinbase has some chances to win despite U.S. courts rarely dismissing lawsuits.
The SEC v. Coinbase BIG motion to dismiss hearing is Wednesday morning.@MetaLawMan will be there live!
— Jeremy Hogan (@attorneyjeremy1) January 15, 2024
Motions to Dismiss are rarely granted so I wasn't expecting much. HOWEVER, I just looked at a prior Order on a motion to dismiss from the same Judge on a crypto case and...
“Based on this Judge's prior dismissal of the Uniswap case, her clear understanding of the technology, her finding that Eth is a commodity, and acknowledgement that Congress should be involved in this process… I'll be very interested to see how this plays out,” Hogan wrote on X on Jan. 15.
“I won’t predict how Judge Failla will rule on Coinbase’s motion to dismiss until after the hearing tomorrow. But, one thing I can confidently predict, the Judge will pose some tough questions to the SEC’s lawyers,” crypto legal expert MetaLawMan wrote on X.
The case is part of the SEC's crackdown on crypto firms that has been taking place since FTX collapsed in November 2022. The case could seal the fate of several crypto tokens in the United States.
Against Coinbase, the SEC is taking the same approach as in the Binance case, asking the court to consider a recent ruling on Terraform Labs that determined the company sold securities without registration. The decision, according to the SEC, provided further grounds for its cases against the crypto exchanges.
Additional reporting by Helen Partz.
Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?
