On Tuesday, crypto exchange Coinbase submitted its final take to a judge on why the lawsuit against it filed by the Securities and Exchange Commission (SEC) should be dismissed.
According to the company, the crypto tokens are not classified as securities and the SEC does not have the authority to regulate the crypto space.
A legal brief was submitted to Judge Katherine Polk Failla of the Southern District of New York in which the company highlighted its stance.
Earlier this month, the SEC had submitted a 40-page rebuttal in which it had made a number of assertions, as revealed by a court filing.
The SEC had filed a lawsuit against Coinbase back in June in which it alleged that the company had not registered as an exchange, broker, and clearing house, even though it was functioning as all of these.
The regulatory agency had also asserted that the staking products the exchange was offering were also problematic.
Later that month, the crypto exchange had moved to get the lawsuit dismissed entirely and it has made a two-fold argument to make it happen.
First off, Coinbase claims that the tokens that are traded on its platform cannot be defined as securities under the definition of ‘investment contracts’.
Secondly, it claims that the regulatory authority of the SEC is limited under the Major Questions Doctrine and the SEC is violating it.
While a decision on the matter has not been made as yet, an individual familiar with the matter said that the judgment made in arguments presented by Coinbase is not typically that simple or easy.
To put it simply, the filing has asked Judge Failla to toss out the lawsuit even before it has actually begun.
A motion that has been filed for judgment regarding the pleadings usually requires the court to decide if there can be a ruling issued as a matter of law.
This would be under the assumption that the facts that the SEC has mentioned in its complaint are all true.
The individual familiar with the matter said that if the judge is not convinced that the lawsuit should be dismissed, then the crypto exchange would want to have the trial as quickly as possible.
They went on to say that the discovery process could take as long as a year, which would mean that a potential trial date of somewhere in the first quarter of 2025 would be set.
As far as Judge Failla is concerned, she has become well-acquainted with crypto. This year saw her issue rulings in favor of Ripple and Uniswap, the DeFi giant.
In July, she had ruled that the XRP token may not necessarily be a security and in September, the judge had analyzed the function of DeFi exchanges using liquidity pools.
One of the most vital elements of the claims made by the SEC is whether or not the crypto tokens that are traded on Coinbase can be defined as securities.
The SEC would need to establish that these tokens are securities in order to convince the court that the crypto exchange was operating an unregistered exchange.