Coinbase claims SEC lacks jurisdiction over cryptos on their platform in response to regulator’s lawsuit.

U.S. crypto exchange Coinbase has stated in its first legal response to the U.S. Securities and Exchange Commission’s (SEC) lawsuit that the digital assets listed on its platform are not subject to the SEC’s jurisdiction.

The SEC filed a lawsuit against Coinbase in early June, claiming that a dozen of the cryptocurrencies offered through its wallet or trading platforms were unregistered securities. In its response filed on Thursday, Coinbase argued that these cryptocurrencies are not investment contracts and therefore do not qualify as securities.

This argument has been previously made by Coinbase in public statements such as tweets and blog posts. However, the filing on Thursday provides further explanation of the company’s position. Coinbase claimed that the cryptocurrencies traded on its secondary market platform are not part of any arrangements where a promoter is selling an asset tied to a contract. The company cited the Supreme Court’s Howey case as an example to support its argument.

The filing stated that the issuers of the tokens have no obligations to investors.

“Because no such obligations are carried in the transactions over Coinbase’s secondary market exchange, and because the value that Coinbase purchasers receive through these transactions inheres in the things bought and traded rather than in the businesses that generated them, the transactions are not securities transactions,” the filing explained.

The filing also reiterated some of Coinbase’s previous public statements, including the claim that SEC Chair Gary Gensler changed his position on the regulator’s authority over crypto, the company’s request for regulation, and the ongoing discussions in Congress regarding crypto regulation.

“Even were the SEC correct that the assets and services it identifies are within the scope of its existing regulatory authority, this action must be dismissed on the independent grounds that it violates Coinbase’s due process rights and constitutes an extraordinary abuse of process,” the filing argued. “For years, Coinbase has voluntarily submitted to regulation by multiple overlapping regulatory bodies, has adhered to the public and limited formal guidance from the SEC, senior SEC Staff, and the courts about the application of securities law to its industry, and has begged the SEC for guidance about how it thinks the federal securities laws map onto the digital asset industry as the SEC’s actions reflected an escalating but undisclosed change in its own view of its authority.”

“The SEC has chosen” to pursue enforcement actions over rulemaking, the filing claimed.

The rest of the filing provides a point-by-point response to the SEC’s lawsuit.

In a separate document filed to the judge overseeing the case, Coinbase alleged that its due process rights were violated when the SEC brought the lawsuit and that the SEC’s lawsuit may violate the “major questions” doctrine. The company requested the judge to allow it to file for judgment and set a 7-week schedule for its motion, the SEC’s opposition, and its own response to the opposition.