U.S. District Judge Katherine Polk Failla denies the motion from Coinbase to dismiss the SEC lawsuit, with the exchange now set to endure a multi-year legal battle like Ripple.
U.S. District Judge Katherine Polk Failla has denied Coinbase’s motion to dismiss the charges filed by the SEC last year.
Court Denies Most of Coinbase Motion
In the landmark ruling issued yesterday, the judge denied most of Coinbase’s motion to dismiss the charges brought by the SEC last year. The court found that the securities agency had a plausible argument against the San Francisco-based agency.
According to Judge Failla, the SEC sufficiently pleaded that Coinbase operated as an unregistered broker, exchange, and clearinghouse under the U.S. federal securities law.
The judge also held that Coinbase facilitated the trading of unregistered securities through its staking program. However, Coinbase secured a partial victory against the SEC, as the court dismissed the regulatory agency’s allegation against Coinbase Wallet.
Coinbase to Face a Lengthy Legal Tussle Like Ripple
Following the recent ruling, the SEC lawsuit against Coinbase will be heading to discovery, with prominent crypto lawyers suggesting that the exchange could also suffer the same fate as Ripple.
In particular, crypto lawyers, including Bill Morgan, said the exchange could go through what Ripple has faced against the SEC for three and a half years.
Coinbase now faces the hell Ripple has gone through for 3.5 years. https://t.co/yQIqmuMsS6 pic.twitter.com/aLLF5t3HaW
— bill morgan (@Belisarius2020) March 27, 2024
Recall that in December 2020, the SEC charged Ripple with violating federal securities laws through the sales of XRP, a crypto asset it labeled as a security.
Like Coinbase, Judge Analisa Torres also denied Ripple’s motion to dismiss the SEC’s charges at its early stage, as the lawsuit continues to linger to date. Although Ripple’s early motion to dismiss the SEC’s charges was denied, the crypto payments company scored a major victory against the regulatory agency in the summary judgment.
After a series of arguments that lasted multiple years, the court found that Ripple did not violate the law by selling XRP on digital exchanges. It also sided with Ripple on the issue of other distributions, finding that the transactions do not constitute investment contracts.
However, Judge Torres ruled in favor of the SEC regarding Ripple’s past XRP sales to Institutions.
So far, the Ripple lawsuit has passed through the discovery and summary judgment phases and has lingered for over three years.
The case is now in the remedies phase, and the SEC has filed an opening brief for the proceedings. Notably, Ripple will submit its opposition to the brief by April 22, and the SEC will get a chance to file its reply by May 6.
Crypto Enthusiasts Expected Coinbase Lawsuit to Proceed to Discovery
Meanwhile, top crypto enthusiasts are not surprised that the SEC’s case against Coinbase is heading to the discovery phase. Pro-crypto journalist Eleanor Terrett is among those who share this sentiment.
The journalist suggested that the SEC did not need a solid argument to convince the judge to deny Coinbase’s motion to dismiss.
“Would have been very surprising if Failla hadn’t found at least one plausible argument in the handful they are alleging against Coinbase,” Terrett remarked.
However, she asserts that Coinbase would now get a chance to prove its case in court as Ripple did.
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