Legal Experts Predict Complete Dismissal in Coinbase vs SEC Lawsuit
Legal experts believe that Coinbase has a high chance of securing a complete dismissal in its ongoing lawsuit with the US Securities and Exchanges Commission (SEC). The court hearing earlier this week gave Coinbase a good chance of winning the legal battle against the SEC.
SEC and Coinbase Disagree on Securities
A New York court recently heard oral arguments on Coinbase’s motion to dismiss the SEC’s lawsuit against the crypto exchange. The court hounded both parties about their differing views on whether digital assets should be classified as securities. The judge questioned the SEC attorneys about the Howey test and why a digital token issuance would meet its criteria.
The SEC filed a lawsuit against Coinbase in June 2023, alleging that the exchange facilitated the trade of 13 crypto tokens that should have been registered as securities. Coinbase argues that crypto-assets do not meet the definition of an investment contract.
Coinbase Likely to Win Its Motion
Experts predict that Coinbase will win its motion to dismiss the SEC’s claims. Bloomberg’s Senior Litigation Analyst, Elliot Z. Stein, believes there is a 70% likelihood of Coinbase winning the dismissal. Coinbase has consistently argued that the SEC is overstepping its authority and broadening its definition of a security.
Coinbase’s arguments state that the SEC’s authority is limited to securities transactions and that the transactions in question do not qualify as such. They assert that the SEC’s definition of an investment contract is too broad.
Experts rely on a US Supreme Court case to determine whether an investment product meets the definition of a security. The key factor is whether people are investing in a joint enterprise with the expectation of profit.
Hot Take: Positive Outcome Expected for Coinbase
Based on the recent court hearing and expert opinions, it is highly likely that Coinbase will secure a complete dismissal in its lawsuit against the SEC. The arguments put forth by Coinbase questioning the SEC’s authority and definition of securities seem to be resonating with legal experts. If Coinbase succeeds in dismissing the claims, it could have significant implications for the regulation of digital assets and set a precedent for the industry.
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