Summary
Coinbase faced probing questions in court from New York District Judge Katherine Polk Failla regarding whether the tokens listed on its exchange should be considered securities. Coinbase is being sued by the Securities and Exchange Commission (SEC) for allegedly operating as an unregistered exchange, broker, and clearing agency. Coinbase’s lawyer argued that the SEC did not provide sufficient evidence to satisfy the definition of an investment contract for the tokens in question. The lawyer also argued that blockchain tokens differ from securities because token buyers do not receive the same rights as stockholders. The SEC and Coinbase attorneys clashed over whether bitcoin is a security, with Coinbase arguing that it does have an ecosystem. The judge questioned whether past court decisions, such as the Ripple case, should be considered. Coinbase invoked the major questions doctrine, but the judge expressed hesitation to apply it as it is rarely done. The judge indicated that she would not make an immediate decision and the case may proceed to discovery and potentially trial.
Key Points
1. New York District Judge Katherine Polk Failla questioned Coinbase in court about the classification of tokens listed on its exchange as securities.
2. Coinbase is facing a lawsuit from the Securities and Exchange Commission (SEC) for allegedly operating as an unregistered exchange, broker, and clearing agency. Coinbase has denied these claims and is seeking dismissal of the case.
3. Coinbase’s lawyer, William Savitt, discussed the definition of securities and argued that token transactions may or may not constitute investment contracts. He emphasized that simply reading white papers and information about token projects does not necessarily mean buyers are entering into investment contracts.