Coinbase's stock falls after request to dismiss the SEC's suit was denied (2024)

By Tomi Kilgore

Cryptocurrency exchange said the court's decision was typical and expected

Shares of Coinbase Global Inc. fell Wednesday, after the cryptocurrency exchange said its request to dismiss the U.S. Securities and Exchange Commission's lawsuit was denied by a federal court.

But Coinbase's general counsel, Paul Grewal, played down the denial, saying it actually played into the company's hands. He said not only was he "prepared" for the denial, he now looks forward to finding out more about the SEC's internal views on crypto regulation.

"Early motions like ours against a government agency are almost always denied," Grewal wrote in a post on the social-media platform X, formerly Twitter. "But clarity is the ultimate goal and today's decision continues us on that path."

The stock (COIN) dropped 2.5% in morning trading. It has shed 7% since closing Monday at the highest price ($279.71) since Dec. 27, 2021.

Meanwhile, bitcoin (BTCUSD) fell 0.9% in morning trading. The correlation coefficient between Coinbase's stock and bitcoin over the past year was 0.96, according to a MarketWatch calculation of FactSet data, whereas a correlation of 1.00 means they move perfectly in tandem.

The SEC's lawsuit, filed in June 2023, alleged Coinbase unlawfully offered exchange services to investors even though it didn't register as a national securities exchange. The SEC said Coinbase's "failures" deprive investors of "critical protections," such as disclosures and safeguards against conflicts of interest.

"Looking ahead, we remain confident in our legal arguments, we look forward to proving we're right, we are eager for the opportunity to take discovery from the SEC for the first time, and we appreciate the Court's continued consideration of our case," Grewal said.

Read: Inside the crypto industry's plan to vanquish the SEC at the Supreme Court.

On the bright side, Grewal noted that Judge Katherine Polk Failla, of the U.S. District Court of the Southern District of New York, did dismiss the SEC's claims against Coinbase Wallet.

"We also appreciate the Court's understanding that technology innovations like Coinbase Wallet do not and cannot implicate U.S. securities laws," Grewal said.

Coinbase's stock has run up 49.6% year to date, while bitcoin has soared 65.1% and the S&P 500 index SPX has gained 9.4%.

-Tomi Kilgore

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