A Bloomberg intelligence analyst is estimating that top US-based crypto exchange platform Coinbase has a 70% chance of winning a motion to toss out the U.S. Securities and Exchange Commission’s (SEC) lawsuit against it.
In a new thread, Bloomberg analyst Elliott Stein says that before going into a court hearing on the matter, he believed that Coinbase would be able to dismiss the regulatory agency’s accusations regarding the violation of trading laws specifically, but not the SEC’s other claims against it.
However, Stein says that he left the hearing believing that Coinbase would win a full dismissal.
According to Stein, the reason for that is because he found Coinbase’s definition of “investment contract” more compelling compared to the SEC’s – a fact he believes will also defeat the regulator’s other claims against the crypto exchange.
“Coinbase 70% likely to win. Coinbase is likely to win this motion, we think. The judge wanted a limiting principle to the SEC definition of ‘investment contract’ that wouldn’t encompass collectibles. We view the one offered by Coinbase as more compelling, requiring investment in a business versus just an ecosystem, along with an enforceable obligation.
As the Ripple ruling in July suggested, sales of digital assets on public exchanges don’t fit neatly into the Howey test for what constitutes an investment contract. Even if the case survives, it likely reaches the Supreme Court, which we think will narrow Howey. Coinbase’s definition of ‘investment’ would also beat the SEC’s staking claim.
And Coinbase had good arguments that the SEC’s allegations don’t sufficiently plead that it was performing broker functions.”
The SEC first sued Coinbase in June 2023 for allegedly violating securities laws, including the sales of unregistered securities and operating an unregistered exchange/broker agency.
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