Coinbase accused the U.S. Securities and Exchange Commission (SEC) of overstepping the boundaries of its powers in an Oct. 24 court filing.

The exchange argued that the SEC’s classification of crypto assets listed on its platform as securities falls outside its jurisdiction, further alleging that the regulatory body seeks to redefine the criteria for what constitutes security, which is a departure from established norms and precedents.

In an Oct. 24 post on X (formerly Twitter), Paul Grewal, the Chief Legal Officer at Coinbase, said SEC’s actions reflect an attempt to maintain oversight over both “security” and “contract” without any limiting parameters.

“By arguing that any purchase in which the buyer hopes for an increase in value constitutes an investment contract-and therefore a security-the SEC is attempting a radical expansion of its own authority. Only Congress can do that as the major questions doctrine makes clear,” Grewal added.

Coinbase’s argument

In its submission, Coinbase clarified that not every financial transaction with profit potential should be considered a security and emphasized that the SEC’s jurisdiction was limited to securities transactions alone.

“Investment contracts grant the purchaser a contractual claim related to the future income, profits, or assets of a business enterprise. That is what makes them securities rather than just investments.”

The exchange also furthered that its staking program does not qualify as a security because the “IT outsourcing services offered involve neither an investment of money by customers nor managerial efforts by Coinbase.”

It added:

“Were the SEC’s position accepted, countless software-driven services would be securities. That would be another radical expansion of SEC authority with no grounding in precedent.”

Coinbase and the SEC have been involved in a drawn-out legal battle over the past year over crypto regulations. The regulator had filed similar lawsuits against major crypto exchanges, including Binance, in June.