Renowned legal expert and advocate for digital assets James "MetaLawMan" Murphy has shared his insights on the recent progress in the legal feud between the SEC and crypto exchange giant Coinbase. The contentious battle, which centers around the classification of crypto tokens, has witnessed a pivotal moment with a compelling amicus brief presented by six esteemed securities law scholars.
Legal scholars hailing from esteemed institutions such as Yale, the University of Chicago, UCLA, Fordham, Boston University and Widener have collaboratively submitted a potent amicus brief. This brief dismantles the SEC's "investment contract" proposition and tactfully traces the historical evolution of the term, dissecting its meaning both before and after the enactment of the federal Securities Act in 1933.
Excellent legal work product.— MetaLawMan (@MetaLawMan) August 12, 2023
The scholars' analysis culminates in three resolute conclusions. Firstly, by 1933, the interpretation of an "investment contract" had congealed in state courts, denoting a contractual agreement entitling investors to a proportionate share of the seller's ensuing income, profits, or assets. Secondly, post the landmark Howey decision in 1946, a consistent thread linking investment contracts remains — an investor's involvement necessitates an enduring contractual claim on the enterprise's income, profits, or assets.
Lastly, the Supreme Court's identification of every "investment contract" invariably hinges on a contractual commitment that ensures an enduring stake within the enterprise.
Murphy enthusiastically champions this amicus brief, asserting that it could potentially prove to be the decisive blow to the SEC's contention that crypto tokens traded on secondary markets inherently constitute investment contracts. With this well-crafted legal argument, Coinbase appears to be making significant strides toward emerging victorious in its ongoing legal bout with the SEC.