Coinbase was hailed by the industry for its announcement that SEC will be dropping their case against it.
It was then that the Bybit hack happened, which reminded us of how volatile crypto news can sometimes be.
Here you can find out more about Bybit. I’d like to elaborate on how the SEC could be affected by the latest developments.
Arie Heijkoop is a Haynes Boone partner and he works in the investment management division. Arie pointed out that the Coinbase dismissal was a significant event. “with prejudice” — meaning the SEC doesn’t expect to bring the case back.
He pointed out the filing of a joint application. “stay” the SEC-Binance case, signaling the agency’s pivot from its regulation-by-enforcement approach (at least toward crypto exchanges).
“It could therefore also indicate the SEC’s leanings in the Binance and Kraken suits down the road,” Heijkoop spoke about the Coinbase decision made by his agency. “But it does seem to be doing a methodical review of each case on its merits, rather than a blanket reverse on similar open matters.”
Can the SEC self-impose a timeline in future guidelines based on the Binance 60-day deferral? Heijkoop stated that this is the thing he’ll watch for.
Even though Bitwise’s general counsel Katherine Dowling noted that the agency may be in trouble, “purgatorial state” Paul Atkins has confirmed that there’s movement. She didn’t seem surprised that the Coinbase case had been brought. “one of the first to fall.”
It was a suit of clothing. “distinguishable” Dowling pointed out that the Binance case filed the previous day in June 2023 was a direct result of the Binance suit. In the case against Binance, there was alleged mismanagement of funds and fraud. The Coinbase lawsuit focused on questions about digital assets classification.
“The fact that the SEC had allowed Coinbase to go public after a lengthy process also called into question the bona fides of the case from the start,” I was told by her. “What had changed fundamentally that caused what appeared to be an about-face by the SEC?”
We can assume cases with hard evidence of fraud will — and should — proceed, Dowling argued. Digital asset classification cases will likely be examined and settled through settlements or outright dismissal.
Hester P. Peirce responded to the SEC’s thinking on such classifications with a statement released Friday entitled “There Must Be Some Way Out of Here.”
Heijkoop does not expect that the SEC’s decision to dismiss Coinbase will have any impact on the enforcement action against crypto-coins or tokens.
“There are pretty significant differences in the many different coin options available, so there is not likely to be a one-size-fits-all approach to regulation of coin issuances,” He also added.
Heijkoop & Dowling had contacted me before Robinhood’s announcement on Monday.
What now?
“I would expect that we should see action in the Ripple litigation next with review no doubt already underway,” Dowling, said. “The SEC has spent years and millions scrapping with Ripple with little at this point to show for these efforts and some judicial spankings to boot.”
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