A pre-motion hearing set to take place on July 13 between the Securities and Exchange Commission (SEC) and crypto exchange Coinbase should provide a sense of the litigation tone and its potential impacts on the broader crypto industry, legal sources told Cointelegraph.
Previously scheduled for August, the conference is a typical request presented by any party seeking a ruling on a specific matter prior to the trial. In this case, the motion was requested by Coinbase in late June. The exchange wants Judge Katherine Polk Faila to dismiss the complaint filed by the regulator on June 5.
As the first hearing between the parties, the conference will likely be "procedural and administrative heavily", explained Mark Kornfield, securities and regulatory attorney. "Coinbase will try to position this case as one that is ripe for early dismissal on any number of grounds. Including that the tokens are not securities under the Howey test and thus the commission is overstepping its jurisdictional authority," Kornfield added.
In its reply to the motion on July 7, the SEC made strong criticisms of the exchange, including that it was aware of possible violations of securities laws, and it is deliberating “ignoring more than 75 years of controlling law under Howey” in an attempt “to construct its own test for what constitutes an investment contract.“
Coinbase's motion also refers to its initial public offering in 2021. According to the exchange, the SEC is now seeking charges for activities “exhaustively described” to the regulator and the general public in the past years.
Although the SEC was aware of Coinbase's business activities, the claim could not be enough to win a case in court. According to corporate and securities lawyer Roland
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