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A consortium of blockchain advocacy groups has joined forces to argue that the Securities and Exchange Commission’s lawsuit against Coinbase is an attempt to “usurp Congress’s authority” and that the judge overseeing it should grant the company’s motion to have the case dismissed.
In June, the SEC sued Coinbase for selling and trading securities on its platform, despite never registering as a securities exchange. Some of those alleged “securities” include top crypto assets like Cardano (ADA), Solana (SOL), and Polygon (MATIC), among others.
“The statutory text, history, precedent, and common sense all foreclose the SEC’s attempt to rewrite the definition of ‘investment contract’ to reach digital asset sales unaccompanied by any ongoing contractual obligations,” wrote the group.
The amici curiae to publish the letter include the Blockchain Association, Crypto Council for Innovation, Chamber of Progress, and Consumer Technology Association.
In its arguments presented in late June, Coinbase invoked the “major questions doctrine” – a legal precedent clarifying that only Congress has the right to answer policy-related questions with major economic and political impact, and not regulatory agencies.
Amici agreed that the lawsuit is a “classic major questions case” in which the SEC is attempting to enact a “transformative expansion” of its authority by regulating nearly all sales of digital assets – even on secondary markets. A recent ruling in the SEC’s lawsuit against Ripple Labs would suggest that the SEC cannot claim this power.
As Ji Kim – General Counsel for the Crypto Council for Innovation – points out, Congress is still considering legislation to establish clear classifications and regulatory jurisdiction for crypto, such as the Financial Innovation and Technology (FIT) for the 21st Century Act.
“The SEC is trying to short-circuit the legislative process and seize the power to resolve questions of massive economic and political importance by pressing its flawed interpretation in enforcement actions,” wrote Kim to Twitter on Friday.