In a significant development, US District Judge Katherine Polk Failla largely denied Coinbase’s motion to dismiss charges filed by the US Securities and Exchange Commission (SEC) regarding its operation as an unregistered securities exchange. The ruling means that the case will continue, marking a blow to Coinbase’s legal defense strategy.
While Coinbase argued that the SEC failed to provide fair notice that crypto assets traded on digital platforms could be considered securities, Judge Polk disagreed, stating that the SEC had provided sufficient notice through various means. However, Coinbase did secure some victories, including the dismissal of charges against its Coinbase Wallet product, which was not mentioned as a revenue source in its shareholder letter.
The ruling demonstrates a notable split among lower courts on how to treat crypto assets and shows the ongoing regulatory scrutiny faced by major players in the crypto industry. Coinbase and the SEC have until April 19 to submit a case management plan, outlining the key issues and trial proceedings. The decision also had an immediate impact on the market, with Bitcoin’s price slipping below $69,000 following the announcement, reflecting investor concerns over the regulatory challenges facing Coinbase and the broader crypto market.
