In a significant development, Judge Katherine Polk Failla of New York has ruled that the case involving the Securities and Exchange Commission (SEC) and Coinbase will move forward, denying the exchange’s motion to dismiss the case.
Judge Failla determined that the SEC has “sufficiently pleaded” that Coinbase operated as an exchange, broker, and clearing agency, and engaged in the unregistered sale of securities through its staking program. However, she did decide to dismiss the SEC’s claim that Coinbase acted as an unregistered broker when it made its Wallet application available to its customers, as per an order filed on Wednesday.
The lawsuit against Coinbase was initiated by the SEC last year, alleging that the exchange operated as an unregistered exchange, broker, and clearing agency. Additionally, the regulator raised concerns regarding Coinbase’s staking and wallet services.
Coinbase has vigorously defended itself against the SEC’s claims, seeking dismissal of the case and accusing the regulator of adopting a “regulation by enforcement approach.”
With the denial of Coinbase’s motion to dismiss, the case is now slated to proceed to trial and will be presented to a jury. However, the trial process is not expected to commence until 2025.