- Coinbase seeks CFTC communications to defend against SEC lawsuit.
- SEC alleges Coinbase listed unregistered securities without proper requirements.
Cryptocurrency exchange Coinbase has filed a motion to compel the U.S. Commodity Futures Trading Commission (CFTC) to produce communications with issuers of 12 tokens that are central to a lawsuit brought by the U.S. Securities and Exchange Commission (SEC). The motion, filed in the Southern District of New York (SDNY), aims to obtain documents that Coinbase argues are essential to its defense.
The SEC’s lawsuit accuses Coinbase of unlawfully listing tokens that should be classified as securities, alleging that the exchange failed to meet the necessary regulatory requirements. It disputes these claims, maintaining that the tokens in question do not meet the definition of securities under the Howey Test, which determines whether an asset qualifies as an investment contract.
Today, @Coinbase filed a narrow motion in DDC to compel @CFTC to produce communications between the agency and the 12 token issuers named in our @SECGov enforcement suit. These are the same types of comms that the SDNY already granted against the SEC. Basic due process requires…
— paulgrewal.eth (@iampaulgrewal) October 1, 2024
Communication Is Crucial
Previously, the SDNY ordered the SEC to produce communications with the token issuers. Following this ruling, Coinbase is now seeking similar cooperation from the CFTC. According to Paul Grewal, Coinbase’s Chief Legal Officer, these communications are crucial in determining whether the assets are indeed investment contracts. Coinbase believes that the CFTC’s interactions with the token issuers will shed light on their development, functionality, and use, key elements in assessing their regulatory status.
The CFTC has so far resisted complying with the subpoena issued in June 2024. It cities concerns about relevance and the burden of producing the requested documents. In response, Coinbase offered to cover the costs of retrieving and reviewing the materials, stressing the importance of the case.
Meanwhile, Coinbase has announced a scheduled system upgrade for Saturday. It will temporarily affect services like Simple and Advanced Trade on its platform.
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