The U.S. Securities and Exchange Commission (SEC) sued Coinbase in June last year, accusing the defendant of providing trading, brokerage and clearing services for unregistered securities, and defined more than a dozen cryptocurrencies such as SOL, ADA, MATIC... as securities.
In response, Coinbase filed a counterargument and sought to dismiss the lawsuit, and the U.S. District Court for the Southern District of New York held a court hearing last Wednesday to hear the claims of both parties, mainly discussing whether tokens listed on Coinbase are securities.
Bloomberg analyst: Coinbase has a good chance of winning the lawsuit
After listening to the court’s five-hour hearing, Bloomberg Senior Litigation Analyst Elliott Stein wrote earlier that he believed Coinbase had a high chance of winning the case and predicted that there was a 70% chance that the SEC’s charges would be dismissed in full.
When I first attended the hearing on the SEC lawsuit against Coinbase, I thought that Coinbase might win the dismissal of its main claim (regarding the transaction) on this motion, but that it might not succeed on the staking and brokerage charges.
But after the hearing, I think Coinbase will probably win the entire case.
Stein further explained that it was a turning point when Coinbase provided a more precise definition of “investment contract” than the SEC.
I think Coinbase offers a more attractive proposition that requires an investment in the business, not just the ecosystem, and enforceable obligations.
On the other hand, he also mentioned that in last year’s SEC lawsuit against Ripple, the judge’s decision in July to rule that exchanges’ trading of XRP was not considered a security would also provide strong help to Coinbase’s lawsuit.
The judge is expected to make a final ruling in the coming weeks
As for whether to dismiss the SEC lawsuit, after the hearing last week, Judge Katherine Polk Failla is expected to make a final ruling in the next few weeks. Next, if Katherine Polk Failla refuses to dismiss the SEC lawsuit, the case will enter the discovery stage. At the end of the discovery phase, both the SEC and Coinbase may file summary judgment motions.
If the judge is still not convinced, it will go to trial, where a jury will decide whether the defendant is guilty or not, but that may not happen until 2025.
Coinbase calls on SEC not to unilaterally expand regulatory scope
Coinbase Chief Legal Officer Paul Grewal tweeted that the SEC continues to claim that it has broad power over all investments while providing no restrictive principles on the definition of investment contracts. The SEC cannot unilaterally expand and redefine its own regulatory scope. This should be done by Congress and the ongoing legislative discussions on the relevant regulatory framework will determine:
Coinbase does not offer securities, we are confident in our legal arguments and look forward to a court decision that will bring clarity to the industry.
