[NEWS] Coinbase has a 70% chance of winning in SEC case, Bloomberg analyst says

Bloomberg senior litigation analyst Elliott Stein said on the 19th that the cryptocurrency exchange Coinbase has about a 70% chance of winning the lawsuit filed by the SEC against it.

Stein had previously said that Coinbase officials could dispute specific SEC allegations, but could not dispute allegations related to the staking rewards program or overall operating structure. However, after the five-hour hearing, Stein's confidence was shaken.

"I thought Coinbase probably wouldn't be able to get the staking and brokerage allegations dismissed before the hearing, but later left thinking Coinbase might be able to win a complete dismissal of the lawsuit," Stein said on X (formerly Twitter).

The SEC claims that Coinbase is selling unregistered securities, arguing that "Coinbase's offering and sale of investment contracts, which are subject to regulation, constitutes an offer and sale of investment contracts."

The SEC lists the securities that it claims to be securities in its complaint. Specifically, it lists Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager (VGX), Dash (DASH), and Nexo (NEXO).

The SEC also claims that Coinbase is operating an unlicensed exchange. Meanwhile, Coinbase flatly denies all of this and says that there is no easy path for a cryptocurrency exchange to register a license.

Stein points out that the turning point was the clear definition of the investment agreement presented by Coinbase compared to the SEC's.

The ruling against Ripple could be favorable

He also mentioned Ripple's partial victory in a lawsuit against the SEC last July. In that lawsuit, the court ruled that XRP sold to individuals on cryptocurrency exchanges does not qualify as a security. Stein suggested that the court's decision on securities in that lawsuit could have a domino effect on the Coinbase lawsuit.

Last week, the SEC was questioned by a judge in the New York District Court about whether the definition of securities was too broad. Regarding this matter, Stein said, "The judge sought a limited principle that does not include digital assets in the SEC's definition of an investment agreement. We believe that the proposal that Coinbase is putting forward is more persuasive, requiring investment in a business and enforceable obligations, not just an ecosystem."

If Coinbase's claims are dismissed in whole or in part, the lawsuit will proceed to discovery. Stein's analysis concluded that while Coinbase may not win the motion, "it will likely win eventually."

Reference:Stein X
Image: Shutterstock

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