In an 84-page order on March 27, the U.S. District Court for the Southern District of New York denied Coinbase’s motion to dismiss the SEC’s case against Coinbase for failing to register as a securities business.

The ruling was written by U.S. District Judge Katherine Failla, who held that the SEC made "reasonable" charges against Coinbase and allowed the SEC to continue to accuse Coinbase of being an unregistered The trading platform, which operates brokers, clearing houses and "participates in the issuance and sale of unregistered securities" through its pledge program, set an April 19 deadline for the parties to agree on a case arrangement plan.

After the news was announced , Coinbase’s stock price fell by more than 10% as of writing.

Coinbase and the SEC "fight to the end"

In June last year, the SEC sued Coinbase. It is accused of violating federal securities laws by providing trading and staking services to the public, and also believes that Coinbase Wallet acted as an unregistered brokerage firm. The SEC also sued Binance that same week, but that lawsuit was settled late last year.

In July of the same year, Coinbase submitted a response document and an application seeking to dismiss the case in its lawsuit against the SEC, responding to the regulator’s Allegations that it illegally operated an unregistered stock exchange.

Paul Grewal, Coinbase’s chief legal officer, has said that the company has never listed securities and that the process used to list tokens is completely consistent with the SEC’s review in early 2021. Unanimous, this marks Coinbase’s official response to the legal dispute and foreshadows a lengthy legal battle to begin.

What happened last night is another key development in the battle between Coinbase and the SEC. Paul Grewal spoke yesterday evening and said, “Today, the court decided that our SEC case will proceed with most of the claims, but dismissed the claims against Coinbase Wallet. We are prepared for this and look forward to learning more about the SEC’s approach to cryptocurrency. Internal perspectives and discussions on regulation."

Meanwhile, an SEC spokesperson said, “We are pleased that another court has confirmed that while the term ‘cryptocurrency’ may be relatively new, courts have used it for nearly 80 years to identify The framework for securities still applies."

However, this is not entirely negative news for Coinbase or even cryptocurrencies.

In March of this year, in opening statements submitted to the Third Circuit Court of Appeals, Coinbase asked the appeals court to direct the SEC to begin drafting cryptocurrency rules. Coinbase said the SEC violated the Administrative Procedure Act because it did not conduct a rulemaking and did not elaborate on why it rejected Coinbase’s rulemaking petition.

"The SEC does not have the legal authority to extend the current securities regime to digital assets, but if the SEC insists on moving forward without congressional authorization, the decision must be made through a look-ahead "Sexual rules will be formulated and enforced," Coinbase said.

Therefore, yesterday’s judgment is conducive to promoting clarity in the formulation of cryptocurrency rules. Like the Binance case, the judge may support the SEC in specific cases and impose a judgment on Coinbase. impose fines. However, courts will challenge the lack of regulatory transparency and registration capabilities, pushing the SEC to seek more concrete solutions, which would be a boon for Coinbase.

The result may not be so bad

At the same time, yesterday’s court ruling also included It is worth noting that the market also gave a good response, that is, in the ruling, Judge Failla rejected the SEC’s claim that Coinbase acted as an unregistered broker through its wallet application.

Coinbase believes that Wallet does not "conduct routing activities," "has no control over users' cryptoassets or transactions conducted through Wallet," and that users "are the sole decision makers for transactions. ", while Wallet "just provides the technical infrastructure for users to arrange transactions on other DEXs in the market." This ruling is a real endorsement of the technology discussed here, and therefore opens up more market possibilities for Base as well as on-chain DeFi.

Coinbase announced the launch of two new wallet solutions at the end of February this year - smart wallet and embedded wallet, aiming to make it easier for new users to enter the chain and Overcome the user experience barriers to creating a crypto wallet. A solution will be added to the Coinbase Wallet SDK, allowing users to create and use wallets without the need for long seed phrases. And one of Base’s goals in its 2024 roadmap is to make smart wallets the default option.

After this ruling came out, crypto KOL even bluntly stated that “Jesse (the person in charge of the Base protocol) is doing a happy dance on Base.”

On March 27, Coinbase Vice President Max Branzburg posted on social media The article states, “In the future, Coinbase will store more corporate and customer USDC balances on Base. This enables Coinbase to manage and protect customer funds with lower fees and faster settlement times without affecting the Coinbase user experience. Coinbase is excited to continue moving its business to the chain and hopes other companies will follow Coinbase's lead."

With the rise in TVL of Base's entire ecosystem, and Coinbase With Base's strong support, the market is generally optimistic about the outcome of this case, believing that Coinbase will eventually win, and this is a catalyst for Base's narrative.

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