Coinbase is pushing back against a previous court ruling that classified secondary sales of crypto assets as “securities transactions.” This ruling stemmed from a lawsuit filed by the SEC against former Coinbase employees for insider trading. However, Coinbase’s legal team argues that this judgment should carry no weight because the crucial issues were not adequately discussed in court. 

Here’s the backstory

In July 2022, the SEC sued former Coinbase product manager Ishan Wahi and others for insider trading involving nine cryptocurrencies. The Wahi defendants contested the case, claiming the tokens were not “investment contracts” and fell outside the SEC’s jurisdiction. But before the court could decide, the SEC settled with the Wahi brothers in June 2023.

The SEC then obtained a default judgment against Sameer Ramani, another defendant in the case. However, Ramani did not even appear in court. Now, Coinbase’s lawyers argue that this judgment should not be taken seriously because the key issues were never properly debated in court.

The latest Update, SEC’s Trump card in the Coinbase case!

The SEC in their recent filing tried to use the Wahi case to bolster its argument against Coinbase. But Coinbase is not having it. They’re challenging the SEC’s authority over crypto exchanges and seeking to have the case dismissed entirely. They’re also questioning whether the crypto assets on their platform meet the legal definition of securities under the Howey test.

Despite the legal battle, experts predict that Coinbase has a good chance of getting the case dismissed. Bloomberg analysts estimate a 70% probability of Coinbase winning in court. This lawsuit is crucial for Coinbase, as it could have significant implications for the entire crypto industry’s regulation.

Lawyer’s Says No Need to Panic

Dropping fresh Crypto FUD. Legal experts said that it could take Judge Failla (Coinbase vs SEC) anywhere from 2 to 6 weeks to make a decision. We are into the 7th week. Is it time to panic yet? According to Paul Grewal’s remarks, Coinbase seems to have little reason to panic following the Wahi case ruling. According to Coinbase’s lawyer, the judge’s decision was based solely on the SEC’s filings, without considering any opposing arguments or amicus briefs. Therefore, the ruling’s significance as a precedent or persuasive authority is questioned, suggesting that Coinbase may not be in immediate jeopardy.

On the Flipside

As of now, the Wahi case ruling’s impact on the crypto industry is uncertain. Meanwhile, the SEC’s approval of spot Bitcoin ETFs, with Coinbase as the custodian, is a positive step for crypto adoption. 

Overall, the SEC’s latest move in the Coinbase case, building on its win in the Wahi case, shows the agency’s strong position to keep pursuing the lawsuit against the crypto exchange.

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