With the hearing for the Coinbase and SEC lawsuit scheduled for tomorrow, top legal expert James Murphy has provided four potential outcomes of the case.
The SEC v. Coinbase lawsuit has garnered massive attention within the crypto industry. According to multiple legal experts, the lawsuit’s outcome could set a precedent for regulating and classifying cryptos as security or commodity.
SEC v. Coinbase Lawsuit
In June, the SEC charged Coinbase with violating federal laws and operating as an unregistered national securities exchange, clearing agency, and broker. The SEC also labeled over ten crypto assets listed on Coinbase and the exchange’s staking offering as securities. In response, Coinbase filed a motion to dismiss the SEC’s charges in the initial stage of the lawsuit.
The San Francisco-based exchange argued that all crypto assets listed on its platform do not constitute securities and that Congress does not authorize the regulatory agency to regulate cryptos.
Notably, the parties have filed the relevant motions to dismiss the case. While Coinbase asks the court to grant the SEC’s motion, the SEC wants the court to deny the motion.
As a result, a Manhattan federal court set January 17 as the hearing date of Coinbase’s motion for judgment on the pleadings.
4 Potential Outcomes of Coinbase v. SEC
Ahead of the January 17 hearing date, prominent legal expert James Murphy (a.k.a. MetaLawMan) has highlighted four potential outcomes of the lawsuit.
SEC v. @Coinbase, Update
The hearing on Coinbase’s Motion for Judgment on the Pleadings will be held on Wednesday, Jan 17.
There are four possible outcomes, with potential permutations to each. ?
— MetaLawMan (@MetaLawMan) January 13, 2024
Option 1: Court Denies Coinbase Motion
The first potential outcome highlighted by MetaLawMan is a scenario where the court might deny Coinbase’s motion to dismiss. The motion can be denied if the SEC tenders sufficient evidence to support its claim that Coinbase violated securities law.
MetaLawMan said for the SEC to record an early victory against Coinbase in the initial stage of the lawsuit, the regulator must show that its facts are “plausible.”
If the court denies the motion, the expert said the lawsuit will enter the discovery phase for a year or more until it reaches the summary judgment stage.
Option 2: Court Grants Coinbase Motion With Prejudice
MetaLawMan speculated the likelihood of the court granting Coinbase’s dismissal motion with prejudice. If this happens, the legal expert said the entire case will be dismissed, bringing an abrupt end to the lawsuit at the district court level.
However, he said the SEC can reignite the case by filing an appeal at the Second Circuit Court of Appeals.
Option 3: Court Grants Motion Without Prejudice
If the court grants Coinbase’s motion without prejudice, the SEC can amend its complaint and address some of the deficiencies cited by the U.S. federal judge.
However, if the judge grants Coinbase’s motion by relying on its argument that the SEC is not authorized to regulate crypto, the plaintiff would not be allowed to amend.
Option 4: Court Grants Motion In Part
In this scenario, the court could give both parties a partial victory. Here, MetaLawMan noted that the court could grant Coinbase’s motion to dismiss the 13 crypto assets labeled as securities while denying the motion relating to the exchange’s staking service.
If this happens, the case will move into discovery with emphasis on the remaining charges (SEC’s claim against Coinbase’s staking).
The expert dismissed the possibility of the judge issuing a ruling at the hearing scheduled for tomorrow, January 17. However, he noted that the questioning at the hearing could provide some hints. Furthermore, the expert speculated that the Coinbase judge would issue the ruling within three months.
Meanwhile, the upcoming hearing is scheduled to take place in a Manhattan federal court on June 17 at 10 AM (EST).
Crypto community members can listen in to the hearing by dialing (888) 363-4749. The access code for the hearing is 5123533.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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