Judge’s Decision Paves Way for SEC vs. Coinbase Trial

A recent ruling by New York Judge Katherine Polk Failla has propelled the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Coinbase forward, marking a significant legal development in the ongoing dispute.

In the latest legal proceedings, Judge Failla determined that the SEC had presented a sufficiently plausible case, rejecting Coinbase’s bid to dismiss the lawsuit. However, the judge did not entirely side with the SEC’s allegation that Coinbase operated as an unregistered broker through its proprietary crypto wallet service. Nevertheless, the decision means that the lawsuit will proceed to trial.

According to the court order, “The court finds the SEC has sufficiently pleaded that Coinbase operates as an exchange, as a broker, and as a clearing agency under the federal securities laws, and through its Staking Program engages in the unregistered offer and sale of securities.” Judge Failla elaborated on the ruling, stating that the SEC’s claims about Coinbase acting as an unregistered intermediary of securities were well-supported by the allegations in the complaint.

Coinbase’s Response

The company’s thanks was sent by Coinbase’s chief legal officer, Paul Grewal, to the court for acknowledging the complexity of technological advancements such as Coinbase Wallet. Such developments shouldn’t unintentionally be subject to US securities regulations, Grewal said. Declaring that “clarity is the ultimate goal and today’s decision continues us on that path,” he recognized the regular denial of early motions against government bodies such as the SEC but emphasized the need of pursuing clarity in legal proceedings.

Both Coinbase and the SEC are preparing for what looks to be a carefully watched trial with potential ramifications for the whole bitcoin sector as the legal struggle continues.