Coinbase is gearing up to challenge a lawsuit filed by the Securities and Exchange Commission (SEC) in June, arguing the regulator has no jurisdiction over cryptocurrency exchanges.
The exchange’s Chief Legal Officer, Paul Grewal, announced during an earnings call Thursday that Coinbase will file a petition seeking dismissal of the case. Grewal expressed confidence Coinbase will prevail against the SEC’s claims it illegally offered securities.
The SEC alleges Coinbase unlawfully operated as an unregistered exchange and broker-dealer by comingling services in violation of securities laws.
Coinbase contends there is no regulatory clarity for digital assets, citing conflicting SEC and CFTC stances on whether cryptocurrencies like Ether are commodities or securities. A New York judge recently ruled XRP was not a security when sold to retail investors, contradicting the SEC’s view.
Despite its legal fight, Coinbase reported a 10% drop in quarterly revenue to $662 million amid declining trading volumes. Transaction revenue fell 13% and consumer revenue 12%.
The exchange’s planned petition comes after a Manhattan judge opined August 1 that cryptocurrencies could be securities regardless of marketing context, contradicting the Ripple ruling in the same court.
