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Coinbase's Legal Team Argues That Biden's Student Loans Ruling Bolsters Defense Against SEC

Coinbase argues recent Supreme Court ruling supports fight against SEC charges.

Coinbase, a prominent cryptocurrency exchange, is currently facing a lawsuit filed by the Securities and Exchange Commission (SEC) for allegedly violating federal securities law. However, Coinbase's legal team is fighting back, arguing that the lawsuit is an attempt by the SEC to exert excessive control over the digital asset industry.

To support their defense, Coinbase has pointed to a recent Supreme Court ruling on student debt cancellation, Biden v. Nebraska. In this ruling, it was concluded that the Secretary of Education had exceeded his authority by canceling a significant amount of student debt. The Supreme Court emphasized the legal doctrine that government agencies must have explicit congressional support when making decisions of economic or political importance.

Coinbase argues that this ruling has implications for their case, as there are currently no clear regulatory frameworks established by lawmakers for the cryptocurrency industry. They believe that the SEC's lawsuit is an attempt to exert control without the necessary guidance from Congress.

In their legal filing, Coinbase argues that the SEC lacks the "clear congressional authorization" needed to regulate digital assets. They point to ongoing congressional deliberations on regulatory frameworks for the digital asset industry, including a bipartisan bill that favors the Commodity Futures Trading Commission (CFTC) over the SEC.

The SEC maintains that digital assets like Solana, Cardano, and Polygon should be classified as regulated securities and accuses Coinbase of operating without proper registration. Similar allegations have been made against other exchanges like Binance and Bittrex, which also contest the SEC's jurisdiction.

A preliminary hearing was recently held in a New York courtroom, marking the beginning of what could be a lengthy trial. Meanwhile, Coinbase recently won a separate case in the Supreme Court, where it was ruled that a user's lawsuit against the exchange could only proceed after an appeal.

In addition to their fair notice defense, Coinbase has put forth several other defenses, including abuse of discretion, equitable estoppel, unclean hands, and laches. These defenses stem from the SEC's alleged regulatory overreach, sudden policy reversals without adequate notice, and resulting prejudice to Coinbase and its shareholders.

The outcome of this legal battle between Coinbase and the SEC holds significant importance for the entire cryptocurrency industry. It not only determines Coinbase's fate but also has the potential to shape the regulatory landscape surrounding digital assets in the United States. With lawmakers currently deliberating various digital asset laws, there is a growing anticipation for more transparent and comprehensive regulatory frameworks to be established.

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