Coinbase files brief in SEC Wahi case, says it doesn’t sell securities, but would like to

Cryptocurrency speech Coinbase filed an amicus little successful enactment of a question to disregard the lawsuit brought by the United States Securities and Exchange Commission (SEC) against erstwhile Coinbase merchandise manager Ishan Wahi and different for insider trading. Coinbase condemns the defendants conduct, it said successful the brief, but supports the defendants’ motion due to the fact that of the SEC’s presumption that the speech listed securities connected its platform.

Coinbase stated successful its amicus (“friend of the court”) little that it had afloat cooperated with the probe of Wahi, his member and their person and it implied that it was nether judgement successful the lawsuit arsenic well:

“The SEC asks this Court to adjudicate issues astatine the bosom of Coinbase’s listing decisions […] successful litigation against unsympathetic idiosyncratic defendants who stole Coinbase’s nonpublic information.”

The speech denied selling securities, but stated that it would similar to merchantability integer plus securities, were it not for the “state of uncertainty” successful regulation:

“Coinbase would similar to grow its level to see digital-asset securities (such arsenic tokenized stocks), but nary U.S. institution tin bash truthful until the SEC provides a wide regulatory framework.”

It besides noted that the Justice Department did not property securities instrumentality charges against the defendants successful its case. Ishan Wahi pleaded blameworthy successful that case, and his member also pleaded guilty.

Arguing that it does not merchantability securities, Coinbase said the SEC approved its nationalist stock listing successful 2021 without saying the exchange’s concern exemplary could let the merchantability of securities oregon that it sold securities. Further, Coinbase argued, its listing bash not walk the often-cited Howey test, established by the U.S. Supreme Court successful 1946, arsenic they are neither investments nor contracts nether it.

Related: US authorities apprehension erstwhile Coinbase manager, alleging insider crypto trading

Coinbase besides cited the large questions doctrine, reconfirmed by the U.S. Supreme Court past twelvemonth successful the lawsuit of West Virginia v. EPA, which acceptable the boundaries for agencies’ overreach. Industry advocacy groups the Digital Chamber of Commerce and Blockchain Association have made akin points successful their ain amicus briefs.

Last week I testified to Congress astir Coinbase’s futile effort to registry with the SEC truthful we tin statesman to connection integer plus securities. Today we filed an amicus little successful SEC v. Wahi that explains wherefore this misguided suit lone makes things worse. 1/5https://t.co/9iWYrWwpiI

— paulgrewal.eth (@iampaulgrewal) March 14, 2023

Finally, the little held that the SEC’s actions interruption “fundamental principles of just announcement and owed process and raises superior concerns nether the APA [Administrative Procedure Act]. “Coinbase seeks much engagement by the Securities and Exchange Commission with the cryptocurrency industry, not less. But that engagement indispensable instrumentality the close form,” it concluded.