Top Analyst Forecasts Coinbase Has a 70% Probability of Winning Legal Battle Against SEC
In the ongoing legal battle between Coinbase, the prominent U.S. cryptocurrency exchange, and the Securities and Exchange Commission (SEC), Bloomberg Intelligence’s senior litigation analyst, Elliott Z. Stein, brings a ray of hope. Stein confidently predicts that there is a 70% chance of Coinbase emerging victorious, garnering the attention of cryptocurrency enthusiasts and market observers.
Stein’s optimism stems from a crucial statement made on January 19 after a court hearing, where Coinbase strategically presented its arguments. The crux of the dispute lies in the classification of altcoin trading services. While both parties agree that altcoins are not unregistered securities, the challenge 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 Coinbase-SEC case has been closely watched by the market, particularly when Judge Katherine Polk Failla questioned the grounds for the case to be dismissed. Notably, influential figures, including Senator Cynthia Lummis, have strongly supported Coinbase’s position.
Facing the heat, Coinbase firmly denies any suggestion that buying tokens implies an investment contract. Initially, Stein believed that the SEC might achieve a partial win, but now he sees Coinbase walking away unscathed. Stein’s previous accurate prediction of Grayscale’s victory against the SEC in 2023 adds credibility to his positive outlook on Coinbase’s legal situation.
Stein introduces a new perspective by referring to Ripple’s recent legal victory, suggesting that the standard Howey test may not neatly apply to the sale of digital assets on public exchanges. This could potentially reshape the understanding of investment contracts. Stein believes that Coinbase is preparing for a robust defense of its altcoin trading rights, which could potentially lead to a showdown at the Supreme Court.
Despite all the developments, Stein remains optimistic about the timeline and expects a ruling by the end of the second quarter of 2024.
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