The news caused Coinbase shares to rise by almost 10% on Wednesday this week.
The SEC has hit back at Coinbase’s claims that the regulator has insufficient evidence to take it to court.
Despite suffering a 12% on the day the lawsuit was announced, COIN is beginning to recovery slightly.
The SEC has accused the exchange of being an unregistered securities exchange, and said it should be restrained from doing so.
Cathie Wood’s Ark Invest fund also acquired $8.46m worth of additional Coinbase shares last week.
US congressional officials have criticized the SEC for its lack of clarity on crypto regulation.
Coinbase was threatened with a lawsuit by the SEC last month, for allegedly offering unregistered securities.
Coinbase monthly trading volume however has grown by 23% since February.
If certain assets listed by Coinbase are considered securities, it threatens to compromise its revenue stream.
The largest US-based crypto exchange topped earnings forecasts but they weren’t too high.
After the SEC’s action against Kraken last week, Coinbase looks ready to step up to the plate.
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