New York District Judge Katherine Polk Failla questioned the Securities and Exchange Commission in court on Wednesday, asking pointed questions regarding staking, what defines security, and how the significant issues doctrine fits into this particular case.
The regulator filed a lawsuit against Coinbase in June, alleging that the company was using it as an unregistered exchange, broker, and clearing agency. Rejecting those allegations, Coinbase has argued for the case to be thrown out and charged the regulator with adopting a “regulation by enforcement approach.”
The SEC claimed in its June complaint that the following tokens were securities: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.
Failla questioned the SEC in court on Wednesday over potential securities law violations by the token issuers mentioned in the lawsuit. “Well, not exactly, your Honor,” the attorney for the agency said. The attorney further stated that the tokens mentioned in the complaint are computer code.
“I’m smiling sir because that’s kind of what your friends at the back table are saying, and they’re wondering why we’re here,” Failla replied.
Failla also inquired about the SEC’s definition of securities, voicing worries that it would be overly inclusive and include collectibles such as Beanie Babies. “I’ve not thought about Beanie Babies in decades, and yet it’s being presented to me in multiple briefs,” Failla stated.
“It is a real fear that I have that your argument is just sweeping too broadly,” Failla continued. According to the attorney for the SEC, they weren’t “contending that collectibles are securities.”
In addition, Failla discussed her stance against being an “activist judge,” pointing out that she had received a brief from U.S. Senator Cynthia Lummis, R-Wyo., advocating for the dismissal of the SEC’s lawsuit against Coinbase.
Also Read: Coinbase Secures US Approval For Crypto Futures Listing
