Coinbase to submit final push Tuesday to dismiss SEC lawsuit

While Judge Failla could rule immediately and dismiss the case on Tuesday, a more likely outcome is that both parties will present oral arguments


24K-Production/Shutterstock modified by Blockworks


After a months-long back-and-forth, Coinbase is taking one final shot at dismissing a lawsuit from the US Securities and Exchange Commission. 

The US crypto exchange will issue its final plea on Tuesday to a federal judge to dismiss the lawsuit, which was filed in June. 

According to a person familiar with the matter, Coinbase’s reply brief will focus on the exchange’s case — that the SEC is violating the major questions doctrine, which prevents agencies from engaging in issues Congress has not yet ruled on. 

Judge Katherine Polk Failla could rule immediately and dismiss the case on Tuesday. A more likely outcome: opt to bring both parties in to present oral arguments. From there the case could then be dismissed, or move on to a jury trial or summary judgment. 

The SEC has alleged that the exchange facilitated trading of unregistered securities and therefore operated as an unregistered exchange, broker and clearing house. The securities regulator classified 13 tokens as securities in the complaint, including Solana’s (SOL) token and Cardano’s (ADA) coin. 

The SEC also alleges Coinbase offered and sold an unregistered security via its staking program, which allows investors to stake five different tokens, all of which the SEC claims constitute as investment contracts. 

Coinbase filed a court motion in August asking Failla to dismiss the case, arguing that the SEC “violated due process, abused its discretion and abandoned its own earlier interpretations of the securities laws.” More importantly, the exchange argued, the SEC has no authority over Coinbase since the digital assets in question are neither investment contracts nor securities, the exchange said. 

The SEC, as expected, opposed this motion, arguing that under the Howey test, investors did have an expectation of profits, even without a formal contract. 

“To distract from the fatal flaws in its legal arguments, Coinbase cries foul and seeks to blame the SEC for its current legal predicament,” the SEC wrote in its Oct. 3 opposition filing

“It contends the SEC blessed Coinbase’s violative conduct when Coinbase went public, that SEC Chair Gary Gensler’s answer to a question at a Congressional hearing (which Coinbase distorts) controls this Court’s application of the federal securities laws, and that the SEC in any case lacks authority,” the SEC filing adds.  

Coinbase has received an outpouring of support from industry leaders and lawmakers in recent months. Some of the parties that have filed amicus briefs with the court in support of the exchange include Andreessen Horowitz, Paradigm, The Chamber of Digital Commerce and Senator Cynthia Lumnmis, R-Wyo. 

“The SEC’s attempt to shoehorn an entire new class of assets into the existing definition of a ‘security,’ and thereby add to the definition enumerated by Congress, exceeds the SEC’s authority, encroaches on Congress’s lawmaking, and contravenes the separation of powers,” Lummis’ letter to the court, filed on Aug. 11, read.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg


The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.


Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral



Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM


The side events were the places to be at Consensus 2024, according to attendees


Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them


I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right


Also, the ETF hype train can count out at least one member