Yours truly was privileged to co-sign an amicus brief in the SEC v. Coinbase litigation, along with:
- Tamar Frankel from Boston University
- Sean J. Griffith from Fordham Law School
- Lawrence Hamermesh from Widener University
- M. Todd Henderson from the University of Chicago Law School
- Jonathan R. Macey from Yale Law School
Crytopolitan takes a deep dive into the brief's core argument. The basic issue in the case is when cryptocurrency become a security, which focuses on whether it is an investment contract under the Howey test:
The Howey test, a cornerstone in securities law, has been a pivotal point of contention in the case. In their filing, the professors emphasized the importance of this test in determining what constitutes an “investment contract.”
According to the Howey test, for something to be deemed an investment contract, there must be an expectation of profits from the investment, which will be derived from the efforts of others. In simpler terms, an investor should anticipate returns based on the endeavors of the enterprise they’ve invested in.
The professors argued that federal cases, through the Howey test, have consistently recognized that “investment contracts” necessitate an expectation in the business’s income, profits, or assets. They stated, “An investor must be promised, by his or her investment, an ongoing contractual interest in the enterprise’s income, profits, or assets. In this section, we discuss some of these cases.” Their argument underscores the need for the Court to remain consistent with the established definition of ‘investment contract’ when interpreting it in this case.
