key takeaways:
- As legal experts refute the SEC’s position, cryptocurrency behemoth Coinbase gains momentum in the legal battle.
- The attorneys requested that the court interpret the term “investment contract” in accordance with the accepted definition.
In a legal showdown that’s captured the attention of the crypto community, legal scholars are rallying behind Coinbase as it faces off against the U.S. Securities and Exchange Commission (SEC). The implications of this clash have reverberated throughout the industry, prompting experts to weigh in on the matter with a blend of casual insight and technical analysis.
A group of six individuals has come together to support Coinbase’s cause, with the collective effort including esteemed law professors from institutions such as Fordham Law School, Yale Law School, and the University of Chicago Law.
Their amicus brief asserts that the SEC’s interpretation of the term “investment contract” is overly broad and should be more limited in scope.
Filed in the U.S. District Court for the Southern District of New York , the amicus brief is a legal document submitted to the court by a party not directly engaged in the specific case. It serves to present additional arguments in favor of one side of the legal dispute while also highlighting the potential wider implications of the case beyond the immediate parties involved.
Republican Senator Cynthia Lummis of Wyoming has also filed a new court document urging the court to reject the SEC’s lawsuit targeting Coinbase. The lawsuit alleges that the prominent U.S. cryptocurrency exchange engaged in the sale of unregistered securities.
The scholars’ comprehensive analysis culminates in three definitive conclusions. Firstly, dating back to 1933, the understanding of an “investment contract” had solidified within state courts, signifying a contractual agreement that entitles investors to a proportionate share of the seller’s subsequent income, profits, or assets.
Crucially, the Supreme Court’s consistent identification of each “investment contract” inevitably revolves around a contractual commitment that guarantees a lasting stake in the enterprise. This emphasis on enduring involvement serves as a cornerstone for their argument, echoing the group’s contention that the term should maintain its established definition.
Legal scholars’ submission highlights strong cases, referencing federal precedents, including “Howey test.” Argument centers on investment contracts tied to business income, profits, or assets. Group urges court to respect established “investment contract” definition:
“Investors should secure ongoing contractual interest in enterprise income, profits, or assets through investment. Cases illustrating this are discussed.“
