Ripple's top lawyer Stuart Alderoty has shared his views on the the U.S. Securities and Exchange Commission's recent filing against Coinbase. "There is so much wrong with the SEC’s brief in the Coinbase case I don’t know where to begin," he posted on X (formerly Twitter).
Alderoty expressed skepticism over the SEC's arguments, particularly their contention regarding the value of digital assets compared to traditional collectibles like baseball cards.
The SEC's recent filing
The U.S. Securities and Exchange Commission (SEC) recently filed a brief opposing Coinbase Global's motion to dismiss the regulator's lawsuit against the cryptocurrency exchange.
Detailed in their memorandum of law, the SEC alleges that Coinbase has been involved in transactions of securities on its platform. Many associate securities with traditional forms like stocks or bonds, but the SEC emphasizes that "investment contracts" can be more expansive. They also counter that a formal, binding agreement between a token's buyer and seller isn't essential to categorize it as an investment contract.
Another bone of contention is whether an investor in such a contract should automatically expect a share in business profits, with the SEC suggesting otherwise. Additionally, the regulator differentiates between primary and secondary market trades, insisting that the Howey Test is relevant for both.
The SEC claims that Coinbase's wallet application functions as a brokerage activity and that its staking program, which rewards users for validating blockchain transactions, amounts to offering unregistered securities.
Coinbase's motion to dismiss
Coinbase recently requested the judge to dismiss the lawsuit on the grounds that it doesn’t trade in securities.
The crypto exchange argues that it does not offer any form of securities. Hence, it contends that the lawsuit is outside of the regulator's delegated authority.
Tomiwabold Olajide
Arman Shirinyan
Godfrey Benjamin
