- Coinbase has responded to the SEC’s attempt to introduce a recent insider trading case ruling to the ongoing lawsuit with the exchange.
- The exchange argues that the decision has no significance and should not influence motions to dismiss.
- Many expect a decision on motions to dismiss as early as this month.
After an extended period of inactivity, things are beginning to heat up again in the SEC case against Coinbase for allegedly operating an unregistered securities exchange.
As the judge considers Coinbase’s motions to dismiss, the SEC has tried to sway her by bringing to her notice a recent default ruling in an insider trading case involving a former Coinbase employee that states that certain crypto assets traded on the platform were securities.
The SEC’s move has elicited a counter-filing from Coinbase. The exchange challenged the worth of the ruling by providing context missing in the SEC’s notice while also calling out the agency for its perceived inconsistent stance.
Coinbase Rails Against the SEC’s Latest Move
On Monday, March 5, in a court filing responding to the SEC’s recent notice, Coinbase contended that the agency had failed to provide useful context around the ruling. As highlighted by the exchange, the judge issued the default ruling at the SEC’s request, assuming its complaint was true and not on merits, as the defendant Sameer Ramani fled prosecution, leaving no chance for proper litigation.
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Coinbase noted that in the same case, two other defendants, Ishan Wahi and Nikhil Wahi, who had opposed the SEC’s classification of traded assets on the exchange, obtained non-monetary and non-admission settlements.
The exchange further pointed out that none of the tokens in the ongoing securities lawsuit were involved in the cited insider trading case. Moreover, the firm argued that the SEC was inconsistent in its stance. While the ruling found that the crypto assets were securities, the agency had told the court otherwise in oral arguments in the Coinbase case in January 2024.
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Channeling sentiments from Coinbase Chief Legal Officer Paul Grewal, who had dismissed concerns over the ruling earlier in the week, the exchange’s lawyers contended that it bore no relevance to the ongoing case against it.
"The Wahi order was procured against an empty chair and its reasoning reflects as much. Coinbase respectfully submits that the default judgment against Mr. Ramani should be afforded no weight," they surmised.
The SEC case against Coinbase is among the most closely watched in the crypto space as it has the potential to reshape how the industry operates in the U.S. As such, many are waiting on the edge of their seats in anticipation of the judge’s decision on Coinbase’s motions to dismiss, which some speculate could come as early as this month.
On the Flipside
- The SEC recently approved multiple spot Bitcoin ETFs with Coinbase as the primary custodian.
- The SEC has also tried to introduce the recent insider trading ruling in its case against Binance.
Why This Matters
The outcome of the SEC case against Coinbase could have far-reaching effects on the broader crypto industry.
Read this for more on the recent back-and-forth between the SEC and Coinbase:
SEC Bolsters Coinbase Lawsuit with Insider Trading Ruling
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