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A critical trial has begun that involves at least 13 cryptocurrencies, affecting all assets other than Bitcoin on a broader scale. The lawsuit filed by the SEC against the Coinbase exchange will be the first major test for the SEC, which has labeled all altcoins as securities. The first details of the hearing seem to be in favor of the crypto industry.
Coinbase Hearing
On June 6, the SEC identified 13 altcoins as securities (investment contracts) and filed a lawsuit against the Coinbase exchange. This move, which came before the BlackRock application, had devastated the morale of cryptocurrency investors. Now, the Coinbase hearing has begun, and every detail here is of critical importance to investors.
At the end of the hearing, we will see whether the case between the SEC and Coinbase will be prolonged like the Ripple case. At the same time, the SEC’s broad defense of its claim that altcoins are securities will also be presented here. The challenging test for the SEC side began about 1 hour ago, and the Judge is one of the most knowledgeable alternatives in the field of crypto.
Details of the Hearing
The Judge asked the SEC why it considered the cryptocurrencies in question as securities. As we mentioned earlier, Judge Failla is extremely experienced in cryptocurrencies and has made decisions in favor of crypto. During the hearing, the Judge has the SEC Attorney cornered, with some details as follows:
- Judge Failla asked the SEC attorney if Bitcoin was an effective currency because it substitutes for fiat, to which the attorney avoided giving a direct answer.
- The SEC Attorney stated, “What makes Bitcoin different is that it does not have an ecosystem, whereas when you buy these other tokens, you buy their entire ecosystems and the integrity of the incentive.”
- Although the SEC has not examined all assets, it points to Bitcoin as the only asset on Coinbase that is not a security.
- Judge Failla asked the SEC, “What is the definition of a security?”
Judge Failla said the following:
“Are there any protective barriers in the Commission’s arguments because I am concerned, and Amici are telling me I should be concerned, you are asking for a very broad definition of what constitutes a security. What does the outcome I find in your favor mean for those who have bought these 12 or 13 tokens?”
The SEC Attorney replied:
“It means that these buyers have purchased a security in the form of an investment contract.”
Failla: “If these purchases are determined to be a security, would the buyers have a right of rescission?”
SEC attorney: “Yes, they would.”
The collectible argument is currently being discussed. Judge Failla says she hasn’t thought about beanie babies for years, but many plaintiffs’ summaries bring up this topic.
Failla: “How do I know you won’t include collectible items or commodities in this?”
SEC Attorney: “When you buy a collectible item like a baseball card, you just buy that product, you don’t transform it into something else. There is no enterprise. The difference between the twelve and thirteen tokens and collectible items is the enterprise, and what is the enterprise? It’s the network. The token you buy is the key to this network. Without it, you can’t enter.”
