An Expert at Bloomberg Says Coinbase Has a 70% Chance of Beating the SEC

An analyst from Bloomberg Intelligence has expressed optimism, indicating that there is a seventy percent chance that Coinbase will prevail in its ongoing legal dispute with the Securities and Exchange Commission (SEC) of the United States.

In a recent post on social media platform X (which was formerly known as Twitter), Elliot Stein, a senior litigation analyst at Bloomberg Intelligence, stated that there is a significant possibility that the regulatory case against the cryptocurrency trading platform will be dismissed entirely without any further action being taken. During the most recent court hearing, essential developments were observed, and this evaluation is based on those developments.

When I attended the SEC v. Coinbase hearing, I expected that COIN would successfully argue for the dismissal of the SEC’s central claims related to trading. However, I was still determining the outcome regarding staking and broker claims. I left with the expectation that COIN would achieve a complete dismissal,” Stein stated.

CryptoSlate previously reported that Judge Katherine Polk Failla raised the question of dismissing the case, given Coinbase’s position, which has garnered support from influential stakeholders such as Senator Cynthia Lummis.

Reasons Why Coinbase Has a Strong Chance of Success

Stein disclosed that Judge Failla had requested that the Securities and Exchange Commission (SEC) provide a clear definition of “investment contract,” with the specific intention of excluding collectibles.

The analyst provided additional clarification and emphasized that Coinbase’s proposed definition was more convincing. While highlighting the importance of investing in a business rather than just an ecosystem, this definition also underscores the necessity of taking action that can be enforced.

Throughout the entirety of the case, Coinbase has maintained that its platform does not lend itself to the trading of “investment contracts.”

The company’s Chief Legal Officer, Paul Grewal, expressed his disagreement with the SEC’s position, highlighting the divergence from well-established legal precedents, including numerous Supreme Court decisions over the years. Grewal stated:

The SEC’s disregard for precedent, failure to uphold due process, and inconsistency with its past interpretations of the securities laws are concerning. This disregard for precedent demonstrates a disregard for the boundaries set by Congress on its authority.

Additional Factors

The analyst highlighted Ripple’s recent legal victory against the regulator as additional proof that the traditional Howey Test may not fully apply to the sale of digital assets on public exchanges. He argued that the Howey Test may only be applicable in part.

In his argument, he contends that this presents a challenge to the conventional understanding of what qualities define an investment contract. Stein suggests that if the case were to be heard by the Supreme Court, it might result in a more precise interpretation of the Howey Test, which might restrict the extent to which it can be applied.

Furthermore, Stein confidently stated that the crypto trading platform successfully refuted the SEC’s staking allegations. Stein concluded:

“Coinbase presented compelling arguments that the SEC’s allegations fail to demonstrate its engagement in broker functions adequately.”