Coinbase has asked the court to dismiss the SEC’s ’empty seat’ securities ruling

Coinbase's attorneys have asked the judge presiding over the legal battle with the US Securities and Exchange Commission to ignore past rulings regarding secondary sales of crypto assets as “security transactions,” citing that they have not been properly examined in court.

In a letter to U.S. District Judge Catherine Failla dated March 5, Coinbase attorney Michael Savit urged the judge to rule on the SEC's preliminary sale of crypto securities on the secondary market in SEC vs. Wahi. He said.

In July 2022, the regulator charged former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi and their friend Sameer Ramani with insider trading related to nine cryptocurrencies.

Wahi's defendants moved to dismiss the lawsuit, arguing that the tokens are not “investment contracts” and are therefore outside the SEC's jurisdiction. Coinbase and others filed briefs supporting the motion.

However, before the motion could be decided, the SEC agreed to a “zero-dollar, no-accept-no-discharge” settlement with the Wahi brothers in June 2023.

The SEC later obtained an uncontested default judgment against Ramani. In doing so, the court accepted the SEC's accusation that crypto assets are “investment contracts” – a position that the SEC itself rejected in the Coinbase case.

Savit said the court's verdict against Ramani – which was not even brought to the case – should not be given any importance because key issues were either argued in the court or not examined.

“Wahi's order was bought on an empty bench and the reasons reflect that. Coinbase respectfully submits that the default judgment against Mr. Ramani should not be given any weight.

The move comes in response to an SEC announcement on March 4 that attempted to undermine Coinbase's case by informing the judge that Wahi's insider trading case was relevant because the tokens were considered securities in court.

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In January, Coinbase and the SEC argued that crypto assets traded on Coinbase's platform met Hawaii's securities requirements.

After the hearing, Bloomberg's senior litigation analyst Elliott Stein predicted that 70% of the exchanges would reject the lawsuit outright.

The SEC sued Coinbase in June 2023, alleging that the cryptocurrency exchange violated federal securities laws by listing 13 tokens it said were “securities.”

The company is seeking an order to dismiss the case, questioning the SEC's jurisdiction over crypto exchanges.

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