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A trial against COINBASE and its CEO Brian Armstrong was thrown out on Wednesday. The judge revealed a loophole in the complainants' application.
In New York's Southern US District Court on Wednesday, the judge dismissed the lawsuit against Coinbase and its CEO. The case alleged that 79 of the cryptocurrencies listed on the currency basis were not duly registered securities and that clients were not notified.
The judge did not indicate whether or not cryptocurrencies were securities and simply presumed they were. Justice Paul Engelmayer stated that the contract for the use of the currency base contradicted the applicants' allegations that the currency base was the "real vendor" of the tokens, and failed to solicit sales in accordance with a strict legal definition of this type.
The original lawsuit included a 255-page document that laid out in detail the case for every single one of the 79 cryptocurrencies being a security under the Howey Test, stating that they were all an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."
CoinTelegraph quoted Philip Moustakis, counsel at Seward & Kissel as saying that the “painstaking” examination of all of these tokens highlighted the need for greater regulatory clarity from the SEC. He stated:
“Unless and until the SEC provides further guidance and a path to compliance for token issuers, crypto lending products, exchanges, and other market participants, the question of whether any particular cryptoasset or transaction is a security will be litigated one at a time,”
The dismissal of the lawsuit against Coinbase might be taken as a disappointment for the SEC, whose Chairman Gary Gensler has let it be known that crypto exchanges are definitely in the crosshairs of the regulator.
highlighted this in a CoinTelegraph article published earlier today, saying:
It's not that surprising. After all, the SEC has indicated its intention to pursue investigations or actions against crypto transactions."
