The U.S. Securities and Exchange Commission (SEC) and leading cryptocurrency exchange Coinbase are locked in a high-stakes legal battle where the SEC has asserted that Coinbase was aware of potential violations before filing a lawsuit. Let’s get into the details of the showdown.

The SEC has revealed that Coinbase was aware of the potential for its listings to be deemed securities under federal securities laws, and was advised by legal professionals. Despite this knowledge, Coinbase attempted to discourage crypto issuers from making any statements that would be associated with securities. Furthermore, Coinbase even admitted the risk of its assets being deemed securities in public filings.

The SEC has fired back with two reasons why Coinbase’s arguments of lack of jurisdiction are invalid. First, they reject Coinbase’s argument that an investment contract requires a formal agreement. Second, they dispute Coinbase’s claim that investment contracts are asset sales only if exchanged on secondary markets.

The SEC also challenges Coinbase’s use of the major questions doctrine. They emphasize that the SEC has longstanding authority to enforce federal securities laws through civil law enforcement actions.

The District Court for the Southern District of New York is set to host a hearing on July 13 to determine the outcome of the Coinbase-SEC drama. The SEC’s response filing has highlighted the awareness of legal risks and Coinbase’s decision to pursue business growth. All eyes are on the court’s ruling to find out the outcome of the clash between the two.