Coinbase Wallet triumph over SEC allegations is a ‘giant win’ for DeFi

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A U.S. court says Coinbase's crypto self-custody Wallet app doesn’t make it a broker. It could have positive ramifications for DeFi app developers.

Crypto lawyers are hailing a recent decision by a United States judge to dismiss allegations against Coinbase Wallet as a win for self-custody wallets and decentralized finance apps.to dismiss a Securities and Exchange Commission’s lawsuit, finding the SEC “sufficiently pleaded” Coinbase was unlicensed and its crypto staking offering was unregistered securities.

Coinbase winning on this issue at this stage means the Court did not think that, even accepting all well-pled SEC allegations as categorically true, there was a plausible basis to conclude that Coinbase acted as a broker by virtue of offering Coinbase Wallet.The court order could be used by DeFi app developers facing similar lawsuits to argue their way out of allegations they acted as an unregistered broker.

He claimed the court also adopted the SEC’s theory that a token project using sale profits to re-invest into its ecosystem is a “common enterprise” where buyers would“This is a disappointing outcome,” Chervinsky said. “But it’s only the beginning — not the end — of the SEC’s case against Coinbase specifically.”

 

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