The U.S. District Court for the Southern District of New York did not agree with the SEC’s claim that Coinbase Wallet is an unregistered broker. This is a significant legal development. Katherine Polk Failla, the judge in charge of the case, voted down the SEC’s request to stop the exchange mining program.
In this decision, Judge Failla said that Coinbase Inc. is following U.S. securities law by trading and offering stocks. This ruling is different from the SEC’s earlier lawsuit against the exchange, which said the company was in violation of the rules.
Coinbase Compliance, SEC Lawsuit Partially Dismissed
After reviewing the case, the judge made it clear that Exchange follows federal securities laws when it works as an exchange, broker, or clearing agent. She stated that the exchange traded securities in the staking program without obtaining a posted offer.
The court’s decision was primarily favorable for Coinbase. The SEC’s lawsuit against them for alleged rule violations was partially cast out.
The SEC sued the exchange on June 6, 2023, saying that the platform was working as an unregistered broker. This was the start of the legal battle between the two groups. The SEC said that Coinbase mixes three different tasks that typically remain separate in standard financial markets: brokerage, exchange, and clearing. The government also went after exchange Earn’s staking scheme.
It was additionally reported by the SEC that Coinbase’s customers were denied important benefits because the company was not registered. Various of these protections were monitoring by the government, duties to keep records, and safeguards against conflicts of interest.
