In the ongoing lawsuit between the Securities Exchange Commission (SEC) and Coinbase, the presiding judge moved the pretrial conference from its initial August 24 date to July 13.
This order came in response to a request from the SEC to grant a three-day extension to respond to Coinbase’s motion to lay off due to the upcoming holiday weekend.
Judge Failla granted the extension, meaning the SEC could file their response on July 7 instead of the original July 3 deadline. However, in doing so, the judge also moved forward the date of the pretrial conference.
A pretrial conference is a meeting between the judge and the attorneys to evaluate the requirements for bringing the case to trial, including set dates for completing certain tasks.
On June 28, Coinbase asked several questions in their motion to dismiss the lawsuit. One was why the SEC would approve the company’s application for an initial public offering (IPO), only to later file legal action against them. In addition, six of the twelve coins categorized as securities in the lawsuit were listed on the exchange (presumably known to the regulator) before the IPO went live in April 2021.
Coinbase labeled the SEC’s actions a violation of its due process rights, amounting to “an extraordinary abuse of process.” In addition, “without assuming the burden of proof or any other burden,” the exchange cited 11 defenses, including no authority to regulate, no securities trading on the Coinbase spot exchange, and Coinbase Wallet does not constitute a brokerage agreement.
CryptoSlate analyzed Coinbase’s potential defense strategies in collaboration with David Lopez-Kurtz, attorney at Chicago-based Croke Fairchild Duarte & Beres LLC and founder and CEO of BSL Group.
The most salient point discovered relates to the proper registration of securities products, such as Coinbase’s Form S-1 filing filed in February 2021.
The process involves the SEC reviewing the form and making sure the disclosures comply with securities laws. Post-review comments are returned for changes before they are declared “effective,” allowing the company to sell securities products.
Lopez-Kurtz said the SEC was satisfied that relevant material risks were appropriately disclosed on Form S-1, which contradicts its current position that the company had repeatedly violated securities laws.
The SEC initiated legal action against Coinbase on June 6. The allegations include violations of securities laws and the improper recording of its activities.
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