The SEC asserts that a court decision grants it control over cryptocurrencies, laying the groundwork for a potential rebuttal in dismissal cases launched against it.
The SEC of the United States has recently submitted a document in its action against cryptocurrency miner Green United that may provide insight into how it would approach the case against Coinbase.
On July 31, District Judge Jed Rakoff rejected Terraform Lab’s move to dismiss the lawsuit, rejecting its justification of the “major questions doctrine.” This resulted in a victory for the SEC.
Alleged cryptocurrency miner Green United put up the same defense in its request to dismiss, and it was also the main point of contention for defendants in actions brought against the SEC by cryptocurrency, including cryptocurrency exchange Coinbase.
In a filing dated August 4, the SEC asserted that the recent Terraform Labs decision adds to the case law supporting the rejection of Green United’s key questions doctrine and fair notice defenses.
The “Major Questions Doctrine” and the “Due Process Clause” “block the SEC from alleging the company’s digital assets to be ‘investment contracts,'” the SEC writes in its letter. “The court rejected defendants’ assertions that.
“Accordingly, Terraform Labs is relevant to this matter because it provides additional authority for rejecting Defendants’ “Major Questions Doctrine” and fair notice defenses,” it added.
The SEC’s most recent arguments may provide insight into how it will address Coinbase’s move to dismiss, which was also submitted on August 4.
The cryptocurrency exchange Coinbase argued the big questions doctrine applied as the SEC tried to regulate the secondary market for cryptocurrency trading in its move to dismiss an SEC case.
A 2022 Supreme Court judgment that stated Congress wants to make policy decisions and does not outsource authority to agencies—whose regulatory authority requires express authorization from lawmakers—established the big questions doctrine.
In the SEC v. Terraform lawsuit, the judge determined Terraform “cannot wield a doctrine intended to be applied in exceptional circumstances as a tool to disrupt the routine work that Congress expected the SEC and other administrative agencies to perform.”
The SEC has already supported its claims in related cases with decisions from other courts.
It wrote to the judge presiding over the SEC vs. Ripple Labs case in April and mentioned a judge’s decision in a lawsuit it had won where it was determined that a long-standing legal precedent provided adequate, fair notice.
