The U.S. Securities and Exchange Commission (SEC) has asked a judge to reject cryptocurrency exchange Coinbase's request to dismiss a lawsuit filed against it.
The SEC argued in its recent filing that Coinbase offers no legal support from federal securities laws or relevant case law to support its claim that the digital transactions it processes are not securities.
The SEC also stated that Coinbase 'knew all along' that digital assets traded on its platform would qualify as securities. The agency believes that buyers reasonably expect the value of their investments to increase based on issuers' plans to increase and maintain the value of their assets, including in the secondary market. This meets the Howey test criteria according to the SEC.
In its defense, Coinbase referred to a recent court decision regarding Ripple. However, the SEC emphasized that this was not appropriate for this case because the judge in that case expressly refused to decide whether secondary market sales of tokens constitute investment contracts.
*This is not investment advice.
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The judge did not refuse to decide, the judge did decide that secondary sales were not securities.