Hey there, folks! We’ve got some interesting developments in the ongoing saga between Coinbase and the U.S. Securities and Exchange Commission (SEC). It turns out that Coinbase might have had an inkling that it was treading on thin ice with federal securities laws even before the SEC decided to take them to court. Sneaky, sneaky!

You see, the SEC just hit back at Coinbase’s earlier argument that the agency lacked the jurisdiction to bring a lawsuit against them. In response, the regulator revealed that Coinbase had actually acknowledged the potential application of federal securities laws to its listings way back when. Talk about a plot twist!

So, let’s rewind a bit. About a month ago, the SEC sued Coinbase, claiming that the popular cryptocurrency exchange was acting as an unregistered broker, clearinghouse, and exchange all rolled into one. They accused Coinbase of listing at least 13 cryptocurrencies that are considered unregistered securities. Naughty, naughty!

But wait, it gets juicier. In their latest filing, the SEC made it clear that they were not going down without a fight. They stated that they would oppose any motion for judgement that Coinbase might throw their way. They even went so far as to ask the court to strike down Coinbase’s arguments, including the one about the suit violating the “major questions doctrine” and other concerns. It’s gloves off in this legal showdown!

According to the SEC, Coinbase, being a big shot with billions in the bank and all, can’t play the ignorance card. They argue that Coinbase, with its fancy legal counsel, cannot claim they were oblivious to the fact that their actions might breach federal securities laws. The SEC even called out Coinbase’s audacity for suggesting that their registration statement, approved by the SEC in 2021, somehow gave them a free pass for all eternity. Nice try, Coinbase!

The SEC further pointed out that Coinbase had adopted the legal framework established by the U.S. Supreme Court to determine whether certain cryptocurrencies met the requirements of federal securities laws. They emphasized that Coinbase had discouraged crypto issuers from making statements that sounded suspiciously like securities talk. So, Coinbase, you can’t pretend you didn’t know the rules!

But wait, there’s more! Even Coinbase’s own public filings apparently hinted at the possibility that their listed assets could be considered securities. So, they were well aware of the risks involved. The SEC isn’t buying Coinbase’s argument that they were just innocently growing their business without realizing the legal implications. Nice try, but no dice!

Now, let’s dive into Coinbase’s counterarguments and why the SEC thinks they fall flat on their face. Coinbase made two flawed points in their defense. First, they claimed that an investment contract must have a formal contract. Second, they argued that investment contracts only count as asset sales if they’re traded on secondary markets. Well, the SEC didn’t buy either of those claims.

According to the SEC, the famous Howey Test doesn’t require a formal contract to establish an investment contract. And as for the secondary markets, transactions there can still be a violation of securities laws. To drive their point home, the SEC referred to their recent legal victory against LBRY. Ouch, Coinbase!

But the battle doesn’t end there. Coinbase also tried to use the “major questions doctrine” to support their case, but the SEC shot that down too. They argued that this particular case falls within the SEC’s authority to enforce statutory requirements. After all, way back in 1934, Congress gave the SEC the power to enforce federal securities laws through civil enforcement actions. Sorry, Coinbase, but no loopholes for you!

So, what’s next in this high-stakes game of legal cat and mouse? Well, mark your calendars for July 13, folks, because that’s when the hearing is scheduled to take place in the District Court for the Southern District of New York. It’s sure to be a showdown worth watching!

Stay tuned for more updates on this nail-biting Coinbase vs. SEC saga. Who will come out on top? Only time will tell, my friends.