New court documents reveal that the U.S. Securities and Exchange Commission (SEC) believes Coinbase was aware that it was potentially violating securities laws prior to the regulator’s lawsuit against the crypto exchange.
In a new court filing, the SEC claims that despite knowing that it was conducting illicit actions, the crypto firm made a calculated decision to continue on as a means of growing its business.
“Coinbase also explicitly discouraged crypto asset issuers from using ‘problematic statements” in their marketing materials that are ‘traditionally associated with securities.’
And since becoming a public company, Coinbase has repeatedly informed its shareholders of the risk that the crypto assets traded on its platform could be deemed securities and therefore that its conduct could violate the federal securities laws – including in the very registration statement it now points to as proof that the SEC supposedly blessed its conduct.
These actions clearly show that Coinbase understood that the securities laws could apply to its conduct and knew which rules to consider in evaluating the legality of its conduct, but nevertheless made the calculated decision to take on this risk in the name of growing its business.”
The SEC initially sued Coinbase last month alleging that it was selling unregistered securities after it named a handful of crypto assets, including Cardano (ADA), Solana (SOL), and Polygon (MATIC), as securities.
In late June, Coinbase filed a motion to dismiss the case, arguing that the SEC lacked jurisdiction on the matter.
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