Six Securities Law Scholars File Amicus Brief Siding Coinbase

Last night, six law professors from Yale, UCLA, the University of Chicago, Fordham, Boston University, and Widener filed an amicus brief that crushes the SEC's theory of an investment contract."

It is worth noting that the amicus brief goes back to the history of the meaning of investment contract.This update was announced by crypto expert and securities lawyer James Murphy, also called The Meta Law Man."

This announcement spurred reactions from many individuals in the X ecosystem, with various perspectives and responses.

Conclusions from Yale University Law Professors

The Meta Law Man tweeted a summary of the amicus brief by the six scholars on the ongoing SEC vs. Coinbase suit.

According to the amicus brief, state courts in the United States had to meet and decide on a standard for defining the term investment contract" in 1933.

SEC v. Coinbase, Big Update:

Six Securities Law Scholars File Devastating Amicus Brief in Support of @Coinbase.

Law Professors from Yale, Univ. of Chicago, UCLA, Fordham, Boston University and Widener filed an amicus brief last night that Absolutely Shreds the SEC's...

- MetaLawMan (@MetaLawMan) August 12, 2023

The courts agreed on the definition that an investment contract is a contractual arrangement that qualifies an investor for a contractual portion/share of the seller's later profits, assets, or income.

Following the Howey conclusion in 1946, a common thread remains that investors must be promised, on account of their investment, an existing contractual interest in the enterprise's profits, assets, or income.

Then, the professors also concluded that all investment contracts' noted by the Supreme Court had to do with a contractual undertaking to provide a surviving share in the enterprise.

SEC v. Coinbase Suit

The legal suit between the United States Securities and Exchanges Commission (SEC) and the largest centralized exchange in the US, Coinbase, has been on since June 2023.

On June 6, 2023, the US sued Coinbase for violating federal securities laws by functioning as an unregistered and unlicensed broker, clearing agency, and exchange for digital assets that were securities.According to the SECs complaint, the agency named 13 crypto assets as types of coins that fulfilled the Howey test.

The 13 coins include Bitcoin (BTC), Ethereum (ETH), USD Coin (USDC), Tether (USDT), Binance Coin (BNB), Solana (SOL), Cardano (ADA), Ripple (XRP), Terra (LUNC), Avalanche (AVAX), Polkadot (DOT), Dogecoin (DOGE), and Shiba Inu (SHIB).

The agency alleged that Coinbase didn't register with it as an exchange, broker, or clearing agency for these digital assets and defied the Securities Exchange Act of 1933 and the Securities Exchange Act of 1934.On the contrary, the US-based exchange denied the SEC's accusation and has filed a motion with the court to dismiss the suit.

The exchange argues that its listed digital assets aren't securities and that the exchange has no obligation to register with the US regulatory agency. Furthermore, Coinbase argued that the SEC's case defies the First Amendment, as it appears to be an attempt to control the crypto industry.

The SEC's lawsuit against Coinbase holds immense importance, shaping digital asset regulations both nationally and potentially internationally.

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