Coinbase has a high probability of winning against SEC, says Bloomberg expert

A Bloomberg Intelligence analyst’s positive assessment of Coinbase’s chances in its legal tussle with the US Securities and Exchange Commission (SEC) gains popularity. Elliot Stein, senior litigation analyst at Bloomberg Intelligence, brought hope to the market. The suggestion is optimistic, with a prognosis of 70% chance for the cryptocurrency trading platform in its legal dispute.

The saga began with a January 19 post by Stein on the social media platform X. There he shared his impressions following a recent court hearing. According to Stein, he initially believed that Coinbase could get some, but not all, of the SEC’s claims dismissed. However, his perception changed after the hearing, concluding that Coinbase could receive complete acquittal.

This case has been closely followed by the market, especially after judge Katherine Polk Failla raised crucial questions. She questioned the SEC on why it should not dismiss the case, considering the significant support of Coinbase’s position from influential figures including Senator Cynthia Lummis.

I went into SEC v. Coinbase hearing thinking $COIN would, on this motion, win dismissal of SEC’s primary claims (concerning trading) but maybe not staking and broker claims. I left thinking COIN would win full dismissal. Snippet below and full note here: https://t.co/UfjiByMLzS https://t.co/7Y2Z93Nrwt pic.twitter.com/yLUUEwdVkl

— Elliott Z. Stein (@NYCStein) January 19, 2024

Definition of “investment contract” is central to the legal dispute

One of the key points of Coinbase’s argument is the definition of “investment contract”. The company argues that its definition is more convincing, emphasizing the need to invest in a business and not just an ecosystem, accompanied by the existence of an enforceable action. This stance is reinforced by Coinbase Chief Legal Officer Paul Grewal, who criticizes the SEC for ignoring established legal precedents. Thus, violating due process and exceeding the limits of his authority.

Furthermore, Stein points to Ripple’s recent legal triumph against the regulator as an indication that the traditional Howey Test may not perfectly apply to digital asset sales on public exchanges. This could challenge the conventional notion of what qualifies as an investment contract.

Finally, Stein mentions that Coinbase has made solid arguments against the SEC’s gambling allegations. He concludes that the SEC’s charges do not sufficiently demonstrate that Coinbase was performing brokerage functions.

This news not only sheds light on the ongoing confrontation between Coinbase and the SEC, but also on the evolving legal understanding regarding cryptocurrencies.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.