In a stunning turn of events following the recent SEC v. Coinbase hearing, Ripple's Chief Legal Officer Stuart Alderoty took to social media to expose what he claims to be major misconduct by the regulator. While not uttered in the courtroom, Alderoty's post adds a new layer of intrigue to the already high-stakes legal battle.
The core issue revolves around the SEC's allegations that Coinbase sold unregistered securities, a charge vehemently contested by the cryptocurrency exchange.
However, Alderoty's post challenges the SEC's narrative, asserting that their focus on whether investors are "pooling [their] capital with the promoter's efforts" is fundamentally flawed. Citing the influential Revak case, Alderoty argues that the Howey test requires more than mere investment in effort; it demands an investment in a common enterprise.
What's next?
The recent hearing, a focal point not just for the crypto market but the entire financial world, saw Judge Failla's probing questions. Notably, she questioned the SEC about tokens like Solana (SOL) and Cardano (ADA) named in the complaint, challenging whether they violated securities laws. The agency's lawyer defended these tokens as mere computer code, prompting a wry smile from Judge Failla.
With the next phase of the legal battle involving Judge Failla questioning Coinbase, the exchange faces the likelihood of the judge denying their motion, pushing the case into the discovery phase. Post-discovery, both the SEC and Coinbase retain the option to file a motion for summary judgment.