SEC: Coinbase Knew About Potential Securities Law Breaches

cryptonews.com:

The US Securities and Exchange Commission has claimed that Coinbase was aware of a potential securities breach when it listed some cryptocurrencies. 

In a recent filing, lawyers for the SEC slammed Coinbase's argument that it was not aware of violating securities laws, noting that the largest US-based cryptocurrency exchange had a sophisticated legal counsel. 

"Coinbase, a multi-billion-dollar entity advised by sophisticated legal counsel, argues it was unaware that its conduct risked violating the federal securities laws, and suggests that by approving Coinbase’s registration statement in 2021 the SEC confirmed the legality of Coinbase’s underlying business activities—at that time and for all time," SEC lawyers wrote Judge Katherine Polk Failla of the Southern District Court of New York.

The commission added that Coinbase's own actions contradict this argument. 

Specifically, the SEC mentioned that the platform had warned shareholders multiple times of the risk that some of its supported cryptocurrencies might violate the securities law. 

"These actions clearly show that Coinbase understood that the securities laws could apply to its conduct and knew which rules to consider in evaluating the legality of its conduct."

The SEC added that the core question before the court is whether Coinbase acted as an unregistered broker with respect to securities law.

In response to the SEC filing, Coinbase Chief Legal Officer Paul Grewal said the allegations are "more of the same."

"They ignore the plain requirement in the Supreme Court’s holding in Howey decades ago that an investment contract first and foremost requires enforceable rights against an issuer. It requires more than just an investment of money etc."

In a June 29 filing, Coinbase