In this illustration taken on June 8, 2023, a smartphone displaying the Coinbase logo and cryptocurrency representation is placed on the keyboard.
Ruvik Dice | Reuters
this Securities and Exchange Commission Significant victory in lawsuit against it Coin library Wednesday, as judge rule A jury could hear its claims that the cryptocurrency exchange engaged in unregistered securities sales at the trial.
Coinbase shares fell about 2.5% on news that a Manhattan federal court rejected its request to dismiss the SEC complaint.
First is the regulator File a lawsuit Against Coinbase in june, accusing the company of acting as an unregistered broker and exchange. The agency also asked that the company be “permanently restrained and prohibited” from continuing to do so.
U.S. District Judge Katherine Polk Failla wrote in the ruling: “The term ‘cryptocurrency’ may be of recent origin, but the transactions at issue are fully consistent with the term that courts have used for nearly eighty years to identify securities. s frame.”
“The court finds that the SEC fully alleged that Coinbase engaged in the unregistered offering and sale of securities through its Stake program,” Failla wrote.
Other judges in the ruling agreed to dismiss the SEC’s claim in the lawsuit that Coinbase acted as an unregistered broker by making its e-wallet app available to customers.
The company responded to CNBC’s request for comment and provided a link Series of posts on X Author: Paul Grewal, Chief Legal Officer of Coinbase.
“We are prepared for this and we look forward to learning more about the SEC’s internal views and discussions regarding cryptocurrency regulation,” Grewal wrote.
The news comes as Coinbase plays a larger role in Wall Street’s adoption of cryptocurrencies. In January, the SEC approved a series of U.S. spot Bitcoin exchange-traded funds. Many of these ETFs work with Coinbase as their custody partner.
These U.S. cash funds have seen record flows since their launch in January. Together they brought in about $52 billion in revenue.
In June, SEC Chairman Gary Gensler said trading platforms like Coinbase “call themselves exchanges” but “mix a variety of functions.”
“We don’t believe the NYSE operates hedge funds,” Gensler told CNBC in June.
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