Unchained Coinbase's Legal Action Against the SEC: How It Will Likely Unfold - Ep. 486
Apr 28, 2023
J.W. Verret, Associate Professor of Law at George Mason Law School and a crypto regulation expert, discusses the legal showdown between Coinbase and the SEC. He explains Coinbase's strategy likening it to a chess game, and how this case might reshape the Howey test. Verret delves into the implications of 'West Virginia vs. EPA' for crypto, critiques the SEC's tactics with Kraken, and speculates on the Ripple case’s future. This conversation is a must-listen for anyone curious about the evolving landscape of cryptocurrency regulation.
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Coinbase's Countersuit Strategy
- Coinbase is countersuing the SEC, which is rare, and this strategy may have short-term, intermediate-term, and long-term advantages.
- Short-term, it postures against the SEC’s broad claims; intermediate-term, it builds a record for Coinbase’s defense; and long-term, it may lead to changes in the Howey Test.
Major Questions Doctrine and Crypto
- The Supreme Court’s major questions doctrine could impact the Howey Test's application to crypto.
- This doctrine questions agency enforcement of old statutes on new issues of national importance, like applying the Howey Test, designed for traditional assets, to digital assets.
SEC's Strategy and Kraken Overreach
- The SEC generally avoids responding to rulemaking requests unless aligned with existing plans, hoping to build precedent through successful cases against tokens.
- Coinbase’s actions disrupt this strategy. The Kraken settlement exemplifies overreach; a hefty fine and shutdown were imposed where registration should have been an option.
