In a major setback for Coinbase Inc. (NASDAQ:COIN), a U.S. court on Wednesday ruled against the cryptocurrency exchange on most aspects of its motion to dismiss an SEC lawsuit.
SEC Alleges Unregistered Securities Activity
The SEC filed a lawsuit against Coinbase in June 2023, accusing the exchange of operating as an unregistered securities dealer in two key areas: its core exchange functionality and its staking program.
The SEC argued that Coinbase facilitates the trading of assets that qualify as securities under federal law, but without registering as a broker-dealer.
Additionally, the SEC alleged that Coinbase’s staking program, which allows users to earn rewards by holding certain cryptocurrencies, constitutes the unregistered offer and sale of securities.
Coinbase Fights Back, Denies Security Classification
Coinbase responded by filing a motion to dismiss the lawsuit, arguing that the SEC was exceeding its authority.
The ...