In the ongoing lawsuit between the Securities Exchange Commission (SEC) and Coinbase, the presiding judge has rescheduled the pretrial conference, moving it from its initial August 24 date to July 13.
This order came in response to a request by the SEC to grant a three-business day extension to answer Coinbase’s motion to dismiss on account of the upcoming holiday weekend.
Judge Failla granted the extension, meaning the SEC could file their response by July 7 instead of the initial July 3 deadline. However, in doing so, the judge also moved the pretrial conference date forward.
A pretrial conference is a meeting between the judge and attorneys, evaluating the requirements for moving the case to trial, including established dates for completing particular tasks.
On June 28, in their motion to dismiss the lawsuit, Coinbase raised several questions. One of these was why the SEC would approve the company’s Initial Public Offering (IPO) application, only to file legal action against them later. Moreover, six of the twelve coins categorized as securities in the lawsuit were listed on the exchange (presumably known about by the regulator) before the IPO went live in April 2021.
Coinbase labeled the SEC’s actions a violation of its due process rights, constituting “an extraordinary abuse of process.” Furthermore, “without assuming the burden of proof or any other burden,” the exchange cited 11 defenses, including no authority to regulate, no securities trading on Coinbase spot exchange, and Coinbase Wallet not constituting a broker arrangement.
CryptoSlate analyzed Coinbase’s possible defense strategies in conjunction with David Lopez-Kurtz, attorney at Chicago-based Croke Fairchild Duarte & Beres LLC and founder and CEO of BSL Group.
The most notable point uncovered relates to the appropriate registration of securities products, such as Coinbase’s Form S-1 filing, submitted in February 2021.
The process involves the SEC reviewing the form, ensuring its disclosures comply with securities laws. Post-review comments are returned for amendments before being declared “effective,” allowing the company to sell securities products.
Lopez-Kurtz said the SEC was satisfied that relevant material risks were appropriately disclosed in Form S-1, which contradicts its current position that the company had repeatedly violated securities law.
The SEC initiated legal action against Coinbase on June 6. The allegations included violations of securities laws and the inappropriate registration of its business.
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