Popular pro-XRP lawyer John E. Deaton has weighed in on the ongoing court case between the United States Securities and Exchange Commission (SEC) and the Coinbase cryptocurrency exchange.
In June, the US securities regulator launched a lawsuit against Coinbase, accusing the exchange of running an “unregistered securities exchange, broker and clearing agency.”
On August 4, Coinbase responded to these charges with a motion to dismiss. The defendants claimed their exchange offered no securities and thus does not operate under the SEC’s jurisdiction.
Deaton Raises Coinbase’s Chances Of Motion Dismissal Following Uniswap’s Victory
According to an X post on August 30, John Deaton had stated there is a 35% chance that Coinbase’s motion to dismiss the SEC’s case gains the court’s favor based on Uniswap’s recent legal triumph.
On August 29, Judge Katherine Failla, presiding over the Coinbase v. SEC, dismissed a class action suit against Uniswap where several investors accused the decentralized exchange of allegedly promoting “scam tokens.”
The court stamped out the case, citing the lack of “identifiable defendants” and the ambiguous state of crypto regulation in the US.
Today on @scottmelker’s show I said there was a 20-25% chance Judge Faila dismisses the SEC’s complaint (or partially dismisses leaving the staking issue), ruling that Howey is inapplicable regarding secondary sales of digital assets on anExchange in blind bid/ask transactions.… https://t.co/irSz1UvSJ9
— John E Deaton (@JohnEDeaton1) August 30, 2023
Initially, John Deaton claimed to have rated Coinbase’s chances of victory at 20-25%, with the possibility of a full or partial dismissal of the SEC charges, perhaps except for the commission’s complaint against the exchange’s staking program.
The lawyer believes the court will likely consider the Howey Test ineligible for cases of “secondary sales of digital assets on an exchange in a blind bid/ask transaction.”
Combining this prediction with Uniswap’s victory against its disgruntled investors, Deaton now proposes there is a 35% chance that Judge Faila will rule against the SEC, throwing out the agency’s lawsuit against Coinbase.
SEC To Pick Up More Losses After XRP? Maybe, Maybe Not
Recently, the SEC has experienced some losses against key players in the crypto space, bringing about a negative public relations (PR) perception for the financial regulator.
On August 30, the crypto space erupted into euphoria after a US court nullified the SEC’s denial of Grayscale’s application to modify its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF.
Furthermore, it was not long ago when Judge Analisa Torres ruled that the programmatic sales of XRP were not a breach of US securities law, granting Ripple a significant partial victory over the US securities watchdog.
However, it may still be too early to call a defeat for the SEC in its case against Coinbase. After all, John Deaton’s prediction only grants the crypto exchange less than half a chance of success in the ongoing legal tussle.
In addition, it is worth noting that the SEC has recently dealt with similar trouble after US Judge Jed Rakeoff rejected Terraform’s motion to dismiss the fraud allegations leveled against it by the Commission, hinging its case on Ripple’s court victory.