Here's Why Coinbase Might Win: Analyst's Take

Elliott Z. Stein, a senior litigation analyst at Bloomberg Intelligence, shared his opinion on why U.S. crypto exchange Coinbase has pretty good chances to become a winner of the legal battle with the U.S. SEC over alleged securities offerings and brokerage.

Coinbase "70% likely to win," Bloomberg expert says

Coinbase, the top cryptocurrency exchange in U.S., has a 70% chance to score a legal win over the Securities and Exchanges Commission, Elliott Z. Stein shared on X (formerly Twitter). The exchange provided a more compelling definition of an investment contract to prove that offering altcoin trading services cannot be intrepreted as an illegal securities offering.

While both parties agreed that cryptocurrency tokens (altcoins) are not unregistered securities themselves, the status of "investment contract" is another tough question for Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York.

Coinbase representatives are stressing that purchasing a token does not involve an agreement between an issuer and buyer and, therefore, should not be regulated as an investment contract.

After joining the process, Stein became even more optimistic about Coinbase's prospects. Previously, he expected partial dismissal of the SEC's claims, while now, he concludes, Coinbase should fight for full dismissal.

It should be noted that the legal expert estimated the odds of Grayscale beating the SEC at 70% in March 2023. Grayscale's court win was one of the greatest regulatory accomplishments in crypto last year.

Expert expects ruling to be announced in Q2, 2024

Stein also recalled the ruling in the Ripple v. SEC case that confirmed that altcoin selling does not fit the Howey test used for the definition of a security.

Coinbase also has brilliant chances to protect its right to trade altcoins before the Supreme Court, the expert added. 

Despite the complexity of the process, the Bloomberg analyst is optimistic about its timeline. For him, the ruling will most likely to be announced by the end of Q2, 2024.

As covered by U.Today previously, prominent crypto lawyer and XRP advocate John Deaton estimated Coinbase's odds of  victory over 50% in October 2023.