Analyst Predicts 70% Chance of Victory for Coinbase Against the SEC

• Bloomberg analyst Elliot Stein predicts a Coinbase victory against the SEC. 
• The analyst said Coinbase offered more compelling arguments on “investment contracts.”
• The decision reached in Ripple v SEC on retail sales of XRP will be pivotal in Coinbase’s case.

Bloomberg senior litigation analyst Elliot Stein has predicted that cryptocurrency exchange Coinbase has a high chance of securing a victory in its lawsuit against the US Securities and Exchange Commission (SEC). 

In a recent post on X (formerly Twitter), the analyst tweeted that Coinbase has a 70% chance of securing a full dismissal against the SEC. The analyst expressed this optimism based on the arguments put forward by both the SEC and Coinbase at their recent court hearing. 

Stein clarified that, before entering the courtroom, he was confident Coinbase could successfully refute certain of the SEC’s charges but not those pertaining to its rewards scheme for staking and general organizational structure. The analyst remarked: 

I went into SEC v. Coinbase hearing thinking COIN would, on this motion, win dismissal of SEC’s primary claims (concerning trading) but maybe not staking and broker claims. I left thinking COIN would win full dismissal.

The SEC argued that Coinbase violated securities law by staking customers’ assets, earning rewards, and returning them. According to the regulator, these acts constitute the offer and sale of investment contracts and thus fall within the SEC purview. 

During the hearing, Stein said Coinbase offered a far more compelling and precise definition of an “investment contract” than the SEC. “My view the one offered by Coinbase as more compelling, requiring investment in a business vs. just an ecosystem, along with an enforceable obligation,” he stated.

Meanwhile, the analyst opined that the decision reached last July in the Ripple v. SEC case would also be pivotal in the current case. The landmark decision by Judge Analisa Torres held that retail sales of XRP on cryptocurrency exchanges did not qualify as securities.

Referencing that case, Stein said, “As the Ripple ruling in July suggested, sales of digital assets on public exchanges don’t fit neatly into the Howey test for what constitutes an investment contract.” Nonetheless, the analyst stated that the decision reached in Coinbase’s case would have a broader implication for the crypto ecosystem.

Meanwhile, the SEC also accused Coinbase of acting as an unlicensed broker. Coinbase has vehemently disagreed, claiming that registering for a license is not a simple process for a cryptocurrency exchange.