Regarding the latest development in the case between Coinbase and the Securities and Exchange Commission (SEC), Marisa Tashman Coppel, legal officer at Blockchain Association, shared her views on the court's decision.
Coppel called the court's rejection of the SEC's claim that Coinbase Wallet was functioning as an unregistered intermediary a “major victory for DeFi.” He criticized the SEC's overreach and called the decision beneficial for developers and those working on peer-to-peer technology.
Despite the victory, the court allowed the SEC's remaining claims to move forward. This means Coinbase will now make hard-fought discoveries and the facts will be considered in summary judgment. At this stage, the court is obliged to accept the facts claimed by the SEC as true.
As the case progresses, the court will grapple with the facts of decentralization, whether the “efforts of others” include the token holders themselves, and how to include token usage areas in the analysis, according to Coppel.
Coppel expressed concern about the court's adoption of the SEC's definition of “ecosystem” in the Howey analysis. The court stated that the tokens are investment contracts because buyers are purchasing the token's ecosystem, which depends on its value. Coppel argued that this reasoning could incorrectly classify many collectibles as securities.
The court's focus on how token projects initially launched their tokens was also notable. Coppel noted that additional facts will emerge during discovery that will undoubtedly support Coinbase's strong arguments.
Although the SEC has already tried to use the opinion as positive precedent in other cases, Coppel remains hopeful that courts will refuse to give the opinion too much weight because discovery has not yet been conducted.
Despite the challenges faced, Coppel remains optimistic. He praised the Coinbase team, led by Paul Grewal, for their strong arguments and expressed confidence in their ability going forward.
The US Securities and Exchange Commission (SEC) achieved great success in its lawsuit against Coinbase on Wednesday, and a judge ruled that the allegation that the cryptocurrency exchange sold unregistered securities could be heard by a jury at the hearing.
*This is not investment advice.
