Summary
New York District Judge Katherine Polk Failla questioned the Securities and Exchange Commission (SEC) in court regarding the definition of securities, staking, and the major questions doctrine in the case against Coinbase. The SEC had previously claimed that tokens including SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO were securities. Failla expressed concerns about the SEC’s broad definition of securities, using Beanie Babies as an example. The judge also mentioned receiving a brief from a U.S. senator calling for the dismissal of the SEC’s case against Coinbase. The case is likely to proceed to discovery if Coinbase’s motion is denied. Failla also dismissed a class action lawsuit against Uniswap Labs, suggesting that expansions of federal securities laws should be the domain of Congress. Other judges have made rulings on whether cryptocurrencies are securities or not in separate cases involving Ripple and Terraform Labs.
Key Points
1. New York District Judge Katherine Polk Failla questioned the Securities and Exchange Commission (SEC) in court regarding the definition of a security, staking, and the application of the major questions doctrine to the case.
2. Coinbase, which was sued by the SEC for allegedly operating as an unregistered exchange, broker, and clearing agency, argued for the dismissal of the case and accused the regulator of using a “regulation by enforcement approach.”
3. Judge Failla expressed concerns about the SEC’s broad definition of securities, citing collectibles like Beanie Babies as an example. She also highlighted her reluctance to become an “activist judge” and mentioned receiving a brief from U.S. Senator Cynthia Lummis, who called for the dismissal of the SEC’s case against Coinbase.