January 17th will be a crucial day for Coinbase, the renowned cryptocurrency exchange platform, and the United States Securities and Exchange Commission (SEC). On this date, both parties will appear before a court in New York for a hearing that will determine the course of the case that the SEC filed against Coinbase on June 6, 2023.
The SEC accuses Coinbase of violating federal securities laws, arguing that 13 tokens listed on the platform, including Solana, Cardano, Polygon, and others, should be considered securities. The hearing will focus on Coinbase’s motion to dismiss the lawsuit, questioning the SEC’s authority over cryptocurrency exchanges. A key detail is that Judge Katherine Polk Faill, known for dismissing crypto cases, will preside over the hearing.
SEC v. Coinbase
Judge Failla is scary smart and is already showing a deeper understanding of the technology than any Judge I've heard so far (including Judge Torres in the Ripple case).
This is the kind of hearing you got to know your s**t and be on your toes!
— Jeremy Hogan (@attorneyjeremy1) January 17, 2024
Analysts Suggest Coinbase Has an Opportunity for the Lawsuit to Be Dismissed
In a previous analysis, Jeremy Hogan, a partner at Hogan and Hogan, noted that motions to dismiss are rare but highlighted that Judge Faill has a track record of dismissing similar cases, including one against Uniswap in 2013. This track record could provide Coinbase with an opportunity, although U.S. courts rarely dismiss lawsuits.
Coinbase, on its part, seeks a favorable ruling by arguing that the SEC never suggested the need to register as a securities exchange when it approved the platform’s registration statement in April 2021. This argument questions the SEC’s retrospective actions and its authority over cryptocurrencies.
Simultaneously, amid the case, an SEC lawyer made relevant statements about Bitcoin. When asked whether Bitcoin is an effective currency because it replaces fiat, the lawyer avoided giving a clear answer. Instead, he emphasized that Bitcoin is different from other cryptocurrencies as it lacks its own ecosystem. The lawyer pointed out that when users buy other tokens, they acquire the entire ecosystem and associated incentives.
In the context of the hearing, Judge Faill raised questions about Senator Lummis’ opinion, suggesting the dismissal of the case, and expressed that existing securities laws date back 90 years and may not be suitable for new technologies like cryptocurrencies.
The January 17th hearing will not only determine the course of the SEC-Coinbase case but could also influence the classification of various cryptographic tokens in the United States, establishing a significant legal precedent for the blockchain industry in the country.