Coinbase recently made its defense strategy public at the same time they filed it. SEC seems to be caught off guard due to Coinbase lawyers not sitting on their hands and filing the papers before the deadline they had.

Coinbase defense

Before the SEC filed suit against Coinbase they had filed briefs with two other crypto-related lawsuits. Presumably, they have seen the writing on the wall with how the SEC treated them and the other crypto companies. These are what are called "amicus briefs". These are filed to help the case in question and start the legal ball rolling in the question the amicus brief pertains to.

The main argument these briefs contain is the claim that the SEC simply lacks authority to police the space because many digital assets are not securities. Their argument is that the SEC has not properly applied the test to determine if something is a security or not. The test in question is most likely the Howey Test. Coinbase argued the digital assets on its platform do not pass that test, in part because they lack contractual agreements. 

A second point made by Coinbase is the fact that the SEC lacks basic guidelines, and because of that companies are unable to get what is called "fair notice" before they sue people. And this they argue violates their right to due process under the US constitution. This argument has the SEC however been dismissive of, and argued their counterpoint that the companies are very well aware of what is a security or not, and they are simply making a calculated business decision in not filing with the sec.

SEC is at a loss for words

Due to the fact that Coinbase lawyers filed their paper "early", it affected the time the SEC have to make a reply. And this whole thing appears to have caught them off guard. This is despite the fact that they, as I see it, should have been able to prepare for this way in advance. Thanks to the amicus briefs Coinbase has filed in other cases more or less making the same arguments.

The SEC has filed their response before July 3ed but has asked the court for an extension. This was granted and they now have until the 13th of July to file their response. And it will be very interesting to see what they come up with. And if they are unable to make a solid counterargument then we might even see Binance making the same arguments as part of their defense. They however are facing numerous other charges that Coinbase is not. So it would only help them partially.

Personally, I am eagerly waiting to hear the SEC's response to this. And it will be interesting to see them fighting with someone that actually fights back. It will also be interesting to see if the Ripple case will impact these cases at all, as that presumably will come to an end before both the Coinbase- and Binance suit. But what is your thought on this defense, think it has any merit to it? 

If you would like to support me and the content I make, please consider following me, reading my other posts, or why not do both instead. I have also just become a partner at Medium, signing up using my referral link or just following me there is also a great way to support me.

https://medium.com/@bo.daniel.jensen/membership

See you on the interwebs!

Picture provided by: https://pixabay.com/