Coinbase files motion to reinforce judge's ruling on Binance case: Secondary market transactions not securities

The SEC is suing Coinbase for selling unregistered securities, but the definition of a security under US law is unclear as applied to crypto, according to Coinbase.

Coinbase files motion to reinforce Judge Jackson's ruling on Binance case
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Key Takeaways

  • Coinbase uses Judge Jackson's ruling to argue for consistent securities law enforcement in crypto.
  • The motion calls for clarity in the application of the Howey test to crypto transactions.

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Coinbase has filed a motion with Judge Katherine Polk Failla, referencing Judge Jackson’s recent ruling in the SEC vs. Binance case, said the firm’s Chief Legal Officer Paul Grewal. The ruling rejected the SEC’s claim that BNB secondary market transactions on Binance were investment contracts.

According to Coinbase’s new filing, the Binance case involved similar allegations of unregistered securities sales. The SEC also sued Coinbase for allegedly selling unregistered securities and operating as an unregistered exchange, broker, and clearing agency.

Last Friday, Judge Jackson dismissed the SEC’s claim to classify BNB, Binance’s native token, on secondary markets as securities. Judge Jackson’s ruling also highlighted that there was conflicting legal precedent on the issue of whether crypto sales constitute securities transactions, according to Coinbase.

“Two learned district courts, analyzing economically identical transactions on two of the largest crypto trading platforms in the United States, have reached diametrically opposed views as to whether those transactions may constitute securities transactions,” Coinbase’s filing read.

The firm states that the SEC is bringing enforcement actions against crypto companies on a case-by-case basis, leading to inconsistent results and a lack of clear guidance for the industry.

“The result of the SEC’s litigation-focused approach to crypto regulation is that market participants now face different rules, not only in different courts in this District, but in different federal courts around the country,” the filing stated.

With the latest filing, Coinbase seeks an appellate review of the SEC’s case against it. The firm believes this could clarify how securities laws apply to crypto assets.

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