Coinbase knew it violated securities law, SEC says

In its latest filing in an enforcement action against U.S. crypto giant Coinbase, lawyers for the U.S. Securities and Exchange Commission took an incredulous tone to the company's argument that it did not know it violated securities laws.

The agency also pushed back on a claim that its approval of a 2021 registration statement related to Coinbase's initial public offering meant that its enforcement case had no merit.

"Coinbase, a multi-billion-dollar entity advised by sophisticated legal counsel, argues it was unaware that its conduct risked violating the federal securities laws, and suggests that by approving Coinbase’s registration statement in 2021 the SEC confirmed the legality of Coinbase’s underlying business activities—at that time and for all time," SEC lawyers wrote Judge Katherine Polk Failla of the Southern District Court of New York.

"In other words, Coinbase adopted the very legal framework as a basis for making listing decisions that it now claims has no applicability to its activities," they continued.

The Howey test

In their initial enforcement suit filing against the company, the SEC alleged that Coinbase referenced the Howey test on its own website as what drove the company to determine whether to list an asset or not.

Friday's filing came in response to an effort from Coinbase to have the case brought against it thrown out. Judge Polk Failla will review the arguments and make a determination in coming days. 

Coinbase Chief Legal Officer Paul Grewal called the SEC's allegations "more of the same" in a series of tweets.