A significant legal clash is looming in the cryptocurrency sphere as the U.S. Securities and Exchange Commission (SEC) readies for a court confrontation with Coinbase. The decision hearing for Coinbase’s petition is scheduled for Wednesday, January 17.
This case, akin to the SEC’s protracted legal struggle with Ripple, prompts speculation about the possibility of another extended court battle. Further insights will surface post-Wednesday’s hearing.
The hearing presents four potential outcomes, each carrying distinct implications:
In Scenario 1, if the judge dismisses Coinbase’s request, the SEC has a straightforward path to victory by demonstrating plausible factual claims. The case would proceed with discovery for an extended period, possibly mirroring the lengthy process seen in the Ripple case.
In Scenario 2, if the judge favors Coinbase’s request “prejudgment,” the entire case would be dismissed at the District Court level. The SEC could choose to appeal the decision to the Second Circuit Court of Appeals.
In Scenario 3, if the judge accepts the case “without prejudice,” the SEC gets an opportunity to amend the complaint to address noted deficiencies. However, if the court questions the SEC’s congressional authority to regulate cryptocurrency exchanges, amendments might become inconsequential.
In Scenario 4, if the judge approves the motion for specific claims, it could involve acceptance for 13 cryptocurrencies but rejection for the staking service. The case would then proceed to the discovery phase, focusing solely on the staking service’s classification as an investment contract.
While a definitive decision during this hearing is unlikely, the judge’s line of questioning might offer insights into potential outcomes.
