A Bloomberg intelligence analyst estimates that top US crypto exchange platform Coinbase has a 70% chance of winning a motion to dismiss the US Securities and Exchange Commission (SEC) lawsuit against it.
In a new thread, Bloomberg analyst Elliott Stein says say that, before going to trial on the matter, he believed that Coinbase would be able to dismiss the regulator’s allegations regarding the violation of trading laws specifically, but not the SEC’s other claims against it .
However, Stein says he left the hearing convinced that Coinbase would get a full dismissal.
According to Stein, the reason for this is that he found Coinbase’s definition of “investment contract” more compelling compared to the SEC’s — a fact he believes will also undermine the regulator’s other claims against the crypto exchange.
“Coinbase has a 70% chance of winning. Coinbase will probably win this motion, we think. The judge wanted a limiting principle for the SEC definition of “investment contract” that would not include collectibles. We view the one offered by Coinbase as more attractive and requiring investment in a company rather than just an ecosystem, along with an enforceable obligation.
As the Ripple ruling suggested in July, the sale of digital assets on public exchanges does not fit neatly into the Howey test for what constitutes an investment contract. Even if the case survives, it will likely reach the Supreme Court, which we believe will limit Howey. Coinbase’s definition of “investment” would also defeat the SEC’s claim.
And Coinbase had good arguments that the SEC’s allegations do not sufficiently support the exercise of brokerage functions.”
The SEC first charged Coinbase in June 2023 for allegedly violating securities laws, including selling unregistered securities and operating an unregistered exchange/brokerage firm.
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