Legal expert John Deaton has offered his insights on the ongoing legal dispute between Coinbase and the U.S. Securities and Exchange Commission (SEC). He believes that Coinbase might achieve a partial win, but a complete victory is unlikely.
However, he maintains that a complete triumph is unlikely, with the chances standing at just 50%.
Deaton’s argument centers on the Howey Test precedents, highlighting that no one has been charged for selling assets on exchanges or secondary marketplaces in almost eight decades.
Deaton finds hope in a recent decision by Judge Analia Torres, who ruled that XRP is not a security in the Ripple vs SEC Case, providing a substantial boost to Coinbase’s defense.
Deaton also suggests that Coinbase has been clever in its defense strategy against the SEC, which might lead to some allegations being dismissed when considered separately.
However, he does not foresee a scenario where Coinbase escapes the staking-related aspects of the lawsuits, suggesting these could remain a point of contention.
In early August, Coinbase took action by filing a request to have the SEC’s case against them dismissed.
The exchange accused the SEC of violating due process and deviating from its prior interpretations of securities law.
Paul Grewal, Coinbase’s Chief Legal Officer, emphasized that the SEC has overreached its authority by attempting to classify asset sales as securities, citing the XRP lawsuit as an example.
In response, the SEC opposed Coinbase’s request to dismiss the cases, a move that Ripple’s General Counsel Stuart Alderoty considered to be baseless.
Deaton, however, said that the SEC may prevail if the motion is granted, setting the stage for a potential split decision.
In the event of a split decision, Deaton believes Coinbase may secure a significant victory concerning token asset sales.
While a complete win appears unlikely, Coinbase’s strategic defense and the recent Ripple case ruling have created a glimmer of hope in an otherwise complex legal landscape.