Coinbase Court Defense: Tokens Listed Are Not Securities, Company Says

Crypto News – On Wednesday, Coinbase was questioned in court by New York District Judge Katherine Polk Failla over the potential securities nature of tokens offered on the exchange.

Coinbase Court Defense: Tokens Listed Are Not Securities, Company Says

The Securities and Exchange Commission filed a lawsuit against Coinbase in June, alleging that the company was using it as an unregistered exchange, broker, and clearing agency. Coinbase has refuted such allegations, stating that the lawsuit ought to be dropped and charging the regulator with adopting an enforcement-first strategy for regulation.

William Savitt, an attorney for Coinbase, examined the definition of securities and noted what they claim is a distinction between “investing in Beanie Baby Inc. and buying Beanie Babies.” The SEC claimed in its June complaint that the following tokens were securities:

• SOL
• ADA
• MATIC
• FIL
• SAND
• AXS
• CHZ
• FLOW
• ICP
• NEAR
• VGX
• DASH
• NEXO

Coinbase does not assert that coins listed on its website can never be regarded as securities, according to Savitt.

We don’t take the view that token transactions can never be investment contracts,

Savitt

Failla has Reservations about the Doctrine

Although the major question doctrine is rarely included in court decisions, Judge Failla brought it up in reference to Coinbase’s case. She claimed that she was terrified of going beyond what the law permitted, which is precisely what Coinbase is requesting her to do in order to stop the SEC.

The doctrine states that clear congressional authority is required for an agency to make a decision on a matter of significant national importance. According to Coinbase, the SEC is attempting to overstep its authority and take actions that could have legislative ramifications, and the concept would be applicable.

My read or my research into this area does not suggest that it comes up very often and even less often does it actually get found by a court,

Failla

Until this case, according to Failla, no one had inquired about the concept in her ten years on the bench. Because it isn’t done often, Failla said she naturally hesitates to implicate the doctrine.