From Nasdaq: 2024-03-27 17:08:48

A Manhattan federal judge ruled that the SEC can proceed with its case against Coinbase, stating that some activities on the platform met the definition of an investment contract. The judge also allowed claims that Coinbase operated improperly as a securities exchange. The ruling supports the SEC’s approach to regulating cryptocurrency.

The judge dismissed some SEC claims against Coinbase related to its crypto wallet application. Critics of the SEC’s enforcement campaign in the crypto industry were shut down by the judge, who ruled that the SEC has the authority to use enforcement actions to develop and regulate cryptocurrency policies. Coinbase may appeal the decision.

The court ruled in favor of the SEC, stating that the agency has the authority to sue crypto defendants under existing power. This shut down arguments that the SEC’s actions violate due process rights or the major questions doctrine. The ruling reaffirmed the SEC’s power to regulate emerging technologies within its authority.

The judge did not address the SEC’s argument that no individual action is significant enough to be barred by the major questions doctrine. However, she stated that Coinbase was on notice of potential lawsuits due to the SEC’s ongoing enforcement campaign. She also noted that the SEC’s action against Coinbase applies an existing standard rather than advancing a new policy. The ruling is seen as a setback for the crypto industry.

Read more at Nasdaq, Inc.: COLUMN: Judge in Coinbase case endorses SEC’s crypto regulation-by-enforcement strategy