The United States Securities and Exchange Commission (SEC) has scored a partial victory in its legal battle against Coinbase, the leading US-based cryptocurrency exchange.

The ruling allows the SEC to proceed with its lawsuit against Coinbase, which says that the platform's Staking Program involves the unregistered offer and sale of securities.

The decision comes as a blow to Coinbase, which had sought to dismiss the lawsuit.

The leading US crypto exchanges argued that cryptocurrencies do not fall under the jurisdiction of the SEC akin to company shares.

The SEC's suit, which was filed last June, claims that several cryptocurrencies available on Coinbase are securities. 

U.S. District Court Judge Katherine Polk Failla previously questioned the agency's interpretation of the law during a hearing.

However, Failla denied the defendant's motion, citing the SEC's sufficient pleading that Coinbase operates as an exchange, broker, and clearing agency under federal securities laws.

The court decision was unexpected. Prominent Bloomberg analyst Elliot Stein estimated a 70% likelihood of Coinbase winning the motion to dismiss the regulator's lawsuit.

Following the court's decision, both parties are now gearing up for a discovery phase.

At press time, Coinbase shares are down more than 2% on the news.