Godfrey Benjamin
Following Judge Failla’s rejection of Coinbase Inc.’s motion to dismiss the Securities and Exchange Commission (SEC) lawsuit against it, industry observers are wondering what will come next in the lawsuit.
Coinbase SEC Lawsuit to Extend to Discovery Phase
FOX Business reporter Eleanor Terrett stated in her X post that the court will set up a full discovery schedule for both entities as the next step in the lawsuit.
This will give Coinbase and the SEC the liberty to request documents for the discovery process from each other. According to speculations from unnamed sources, the full discovery schedule might be good for Coinbase.
The sources highlighted that during such discovery scenarios, cases are undermined and easily exposed. If this is the case, Coinbase is likely to seize the opportunity to obtain as much documents that it needs to get the United States securities agency off its back. Noteworthy, the same tactic applies to the regulator as well.
Terrett recalled a time during Ripple’s case with the same agency. She identified the fact that the discovery period served as a window into the mind of the SEC. This eventually contributed to the positive XRP ruling that the crypto payments platform secured on July 13.
🚨NEW: So what’s next for @coinbase following Judge Failla’s ruling?
The Court will set a full discovery schedule and each side can request documents for the discovery process. Sources familiar tell me: “Some of this case could be undermined and exposed through discovery so…
— Eleanor Terrett (@EleanorTerrett) March 27, 2024
“We were able to see what the agency was thinking and saying internally in regards to Ripple and the wider #crypto industry,” Terrett wrote, adding that “The same will apply here,” in reference to Coinbase.
Coinbase to Ride the Lawsuit Tide
Considering how the Ripple vs SEC case took almost three years before any significant progress was identified, the reporter claimed that Coinbase discovery period could span a few months or more. With the inclusion of processes like filing for summary judgment briefs and a potential trial, Terrett sees the discovery period spanning for as much as a year.
She claimed to have been informed that one of Coinbase’s more near-term options includes a plan to file an “interlocutory appeal”, just like the SEC had tried to do in its lawsuit with Ripple. This interlocutory appeal would likely be on some or all parts of the denial of Motion To Dismiss if Coinbase lawyers think that it makes sense to do so, per Terrett’s analysis.
In this case, Coinbase may need to consider that filing an interlocutory appeals before final judgments makes it difficult to obtain. This was clearly seen in the Ripple vs SEC case when the court denied the agency’s interlocutory appeal against Ripple.
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