U.S. regulators argued Tuesday that Coinbase’s attempt to toss out the securities law violation it faces should be rejected, asserting the crypto exchange’s justification contains “fatal flaws.”

The Securities and Exchange Commission sued Coinbase in June, saying the U.S.-based company failed to register as a securities exchange with the markets regulator. Coinbase has tried to get that case dismissed.

That should be ignored, the SEC said in a filing Tuesday.

“This case turns on whether Coinbase intermediated transactions in ‘investment contracts’ and whether customers on Coinbase’s trading platform therefore were entitled to the protections afforded by the federal securities laws that require intermediaries of securities transactions to register with the SEC,” the regulator said.

Coinbase has argued that crypto trades don’t meet this definition of an investment contract. The SEC disagrees.

“To distract from the fatal flaws in its legal arguments, Coinbase cries foul and seeks to blame the SEC for its current legal predicament,” the SEC said Tuesday. “It contends the SEC blessed Coinbase’s violative conduct when Coinbase went public, that SEC Chair Gary Gensler’s answer to a question at a Congressional hearing (which Coinbase distorts) controls this Court’s application of the federal securities laws, and that the SEC in any case lacks authority to regulate securities transactions that involve crypto assets.”

The SEC added: “But this lawsuit cannot really come as a surprise to Coinbase. It has known all along that a crypto asset bought and sold on its trading platform is a security if it meets the Howey test,” the court ruling that clarified the legal regime around what is and isn’t an investment contract.

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