U.S. District Judge Offers Opinion in Coinbase v. SEC Case


Presenting Opinion at Pre-Hearing

U.S. District Judge Catherine Polka Fira said on the 13th that the SEC will decide to launch Coinbase in 2021 over the case between U.S. cryptocurrency exchange Coinbase and the U.S. Securities and Exchange Commission (SEC). He spoke about his view on the fact that he had approved the Nasdaq stock listing.

Coinbase submitted a listing application document “S-1” to the SEC, and after the SEC approved it, it was listed on the Nasdaq in the spring of 2021.

At a pre-trial hearing, Faira said:

The SEC would have had the authority to register Coinbase as a stock exchange.

With the SEC granting the filing, it’s not unreasonable for Coinbase to think there’s nothing wrong with their business.

It seems that the approval of the listing application documents may have some meaning in the court.

Faira added that the SEC should have had some knowledge of whether Coinbase’s business would be in conflict with securities laws when proceeding with the registration application.

I’m not saying that the SEC should know all of a company’s information when evaluating a registration application.

However, it can be assumed that the SEC would have investigated Coinbase’s activities in detail.

On the other hand, an SEC attorney said, “Mr Faira’s thinking about the registration application is misplaced. The SEC’s approval of a particular company’s stock listing is not the same as approval of that company’s business or business structure. They are different in nature,” he argues.

In addition, there is no evidence that the SEC was investigating the tokens listed on Coinbase and that they had told Coinbase that the tokens they handled would not be pointed out as securities. I continued saying no.

Regarding the securitization of the staking service

The SEC and Coinbase have expressed differing views on the staking program in preliminary hearings.

Coinbase argued that the staking service is not an “investment contract,” meaning there is no securitization. It alleges that “the parties to the stake have no risk of loss” and is a “service contract” similar to IT services.

On the other hand, the SEC argued that “IT services may include the aspect of creating new businesses.” It suggests that if an IT service (in this case staking) has the nature of a new business, user participation may have an element of investment.

Staking service suspended in some areas

Coinbase is suspending new staking services in the US states of California, New Jersey, South Carolina, and Wisconsin.

The background is that the SEC and several state authorities claim that staking services are unregistered securities.

connection: XRP relisting, coinbase staking restrictions, etc. | Summary of important bulletins on the morning of the 15th

What is staking

Infrastructure and technology that allows different blockchains to interoperate with each other. One of the technologies for using a specific cryptocurrency on another blockchain is “Wrapped Tokens”. The technology locks up the original cryptocurrency and creates equivalent Wrapped Tokens, allowing various blockchains to leverage its cryptocurrency alternatives.

▶Cryptocurrency Glossary

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