Home CryptocurrencyBitcoin Coinbase Has 70% Chance of Being Dismissed Outright in SEC Lawsuit: Litigation Analyst

Coinbase Has 70% Chance of Being Dismissed Outright in SEC Lawsuit: Litigation Analyst

by SuperiorInvest

Bloomberg senior litigation analyst Elliott Stein has indicated that he sees a minimal chance of failure for cryptocurrency exchange Coinbase in its ongoing lawsuit against the United States Securities and Exchange Commission (SEC). Stein predicts a 70% chance that the exchange will obtain a complete dismissal of the lawsuit.

In a recent Jan. 19 post on of betting. and general operational structure.

However, his confidence changed after the five-hour hearing:

“I went to the SEC v. Coinbase thinking that COIN, with this motion, would win the dismissal of the SEC’s main claims (relating to trading), but perhaps not the betting and broker claims. “I left thinking COIN would win the total dismissal.”

The SEC alleges that by staking customers’ assets, earning rewards on their behalf, and then returning them, Coinbase is engaged in the offer and sale of investment contracts, thus falling under SEC regulation.

Additionally, the regulator alleges that Coinbase was operating as an unregistered broker. Meanwhile, Coinbase has strongly refuted this, stating that there is no easy way for a crypto exchange to register for a license.

However, Stein explains that it was a turning point when Coinbase provided a more precise definition of “investment contract” compared to the SEC.

“In my opinion, the one offered by Coinbase is more compelling, as it requires investment in a business rather than just an ecosystem, along with an enforceable obligation,” he said.

However, he referenced the recent Ripple v. SEC case, in which Ripple achieved a partial victory in July 2023. The judge ruled that XRP (XRP) is not considered a security when it comes to retail sales on cryptocurrency exchanges.

Stein suggests that the securities decision in this case will also have a ripple effect on the Coinbase lawsuit.

“As the Ripple ruling in July suggested, sales of digital assets on public exchanges do not fit neatly into the Howey test for determining what constitutes an investment contract,” he argued.

Related: Crypto Biz: the Coinbase vs. case SEC to determine fate of crypto tokens

On January 17, Cointelegraph reported that US District Judge Katherine Polk Failla heard arguments from the SEC and Coinbase on the cryptocurrency exchange’s motion to dismiss over a five-hour period.

In a notable point for the crypto community, Failla asked SEC lawyers to explain why a digital token issuance would meet the Howey test, arguing that the case was “overly broad.”

The SEC filed a lawsuit against Coinbase on June 6, 2023, alleging that the crypto exchange violated federal securities laws.

The agency argued that 13 tokens listed on Coinbase were securities, including coins such as Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS), Chiliz (CHZ ). ), Flow (FLOW), Internet Computer (ICP), NEAR (NEAR), Voyager (VGX), Dash (DASH) and Nexo (NEXO).

Magazine: Coinbase Fights SEC in Court, SBF Parents Request Dismissal of Lawsuit, and Bitcoin ETFs: Hodler’s Digest, Jan. 14-20

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