In the ongoing legal standoff between Coinbase, the prominent U.S. cryptocurrency exchange, and the Securities and Exchange Commission (SEC), Bloomberg Intelligence’s senior litigation analyst, Elliott Z. Stein, injects a dose of optimism.
Stein places a confident 70% probability on Coinbase emerging victorious, captivating the interest of cryptocurrency enthusiasts and market observers alike.
Stein’s optimism springs from a crucial January 19 statement following a court hearing where Coinbase strategically argued. At the core of the dispute lies the challenge of classifying altcoin trading services. While both parties agree that altcoins aren’t unregistered securities, the dilemma of labeling them as “investment contracts” looms large before the U.S. District Court for the Southern District of New York, presided over by Judge Katherine Polk Failla.
The market closely watched the Coinbase-SEC case, particularly when Judge Katherine Polk Failla questioned why the case shouldn’t be dismissed. Notably, influential figures, including Senator Cynthia Lummis, supported Coinbase’s position substantially.
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Facing the heat, Coinbase boldly denies any notion that buying tokens implies a secret handshake of an investment contract. Stein, who first thought the SEC might get a partial win, now sees Coinbase walking away scot-free. Stein’s track record, predicting Grayscale’s win against the SEC in 2023, adds weight to his positive take on Coinbase’s legal situation.
Stein throws a curveball by pointing to Ripple’s recent legal win, suggesting the standard Howey test might not fit neatly for selling digital assets on public exchanges. This could shake up the way we understand investment contracts. Stein believes Coinbase is gearing up for a strong defense of its altcoin trading rights, possibly leading to a showdown at the Supreme Court.
Despite everything taking place, Stein remains optimistic about the timeline, expecting a ruling by the end of Q2 2024.
Poll time: Do you think Coinbase will ultimately win against the SEC?
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