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01/18/2024
Coinbase Argues Token Buyers Don’t Acquire Any Rights
PYMNTS
In a Wednesday (Jan. 17) court hearing, cryptocurrency exchange Coinbase Global made a comparison between buying cryptocurrency and collecting Beanie Babies.
The comparison was presented as part of Coinbase’s defense against a Securities and Exchange Commission (SEC) lawsuit accusing the company of selling unregistered securities, Bloomberg reported Wednesday.
William Savitt, a lawyer for Coinbase, argued that the tokens traded on the exchange should not be considered securities under SEC jurisdiction, according to the report. He emphasized that buyers of these tokens do not acquire any rights associated with their purchases, unlike traditional stocks or bonds.
“It’s the difference between buying Beanie Babies Inc. and buying Beanie Babies,” Savitt said, per the report.
The classification of digital tokens as securities has been a contentious issue in the courts, according to the report. In a similar case involving Ripple Labs’ XRP token, a Manhattan federal judge ruled that the token was not subject to SEC jurisdiction. However, in the SEC’s case against Terraform Labs, another judge reached the opposite conclusion.
Coinbase is urging the judge in its case to follow the Ripple decision and dismiss the SEC’s lawsuit, the report said. However, the judge adjourned the hearing without ruling, leaving the outcome uncertain.
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