A SEC representative has said during a hearing in the regulator's case against crypto exchange Coinbase that cryptocurrencies have no intrinsic value.
Following the hearing, the judge has denied the agency's motion for summary judgment. The motion comes in response to the platform's request that the court dismiss the SEC's lawsuit.
The company has explained below, citing the Howey test, that cryptocurrencies in the secondary exchange market are not part of any agreement under which the asset linked to the contract is sold. In addition, token issuers have no obligations to investors.
The regulator has pointed out that many cryptocurrencies differ from each other only because "in themselves they have no intrinsic value." The tokens cited in the lawsuit meet the criteria of the Howey test.
According to the transcript:
"If crypto assets embody some underlying value…that value is accessed through the digital token. […] But the token... has no innate or inherent value of its own—it is tied to its underlying value, which for the crypto assets at issue in this case, is the investment contract."
Coinbase general counsel Paul Grewal has called the argument "more of the same old same old. But don’t just take my word for it."
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