Jamal Al-Farouq Six law professors from various universities across the United States have put forth an amicus brief in support of Coinbase’s stance, sharply criticizing the U.S. Securities and Exchange Commission’s (SEC) interpretation of investment contracts.
These professors include Stephen M. Bainbridge from UCLA, Tamar Frankel from Boston University School of Law, Sean J. Griffith from Fordham Law School, Lawrence Hamermesh of Widener University Delaware Law School, M. Todd Henderson of the University of Chicago Law School, and Jonathan R. Macey of Yale Law School. They collectively contend that for the tokens listed on Coinbase to qualify as investment contracts, there must be a contractual commitment on the part of their issuers towards the investors.
By taking a historical dive into the evolution of securities laws, they highlight that the modern legal framework is rooted in the “blue sky laws,” which traditionally depended on contractual relationships between the issuers and investors to define an investment contract.
Examining various legal precedents, the scholars have found that in all instances where investment contracts were acknowledged by both the Supreme Court and the second circuit, there was a contractual binding present, even in trials following the Howey test.
Coinbase’s view aligns with this perspective, as evidenced by a filing made on June 28, stating that an investment contract can only be recognized if it is linked to an ongoing business enterprise with management having enforceable duties to investors.
The professors’ brief urges the court to stay true to the established meaning of the term, which has been consistently interpreted by state courts in accordance with state blue-sky laws and by federal appellate courts before and after the Howey decision. They conclude that the settled understanding of an investment contract necessitates contractual commitments to provide future value based on a business’s income, profits, or assets.
This perspective, however, is at odds with the SEC’s position. The regulatory body has argued in its filings that Coinbase is trying to create its own criteria for defining an investment contract. According to the SEC, an arrangement might qualify as an investment contract without a contractual obligation, noting that the Howey decision didn’t demand a common law contract, and no court has ruled to the contrary.
The differences in these interpretations have sparked debate, and the outcome may have significant implications for the definition of investment contracts and their regulation. Feel free to share your opinions on the amicus brief filed by these six distinguished law professors in the comments section.
Table Of Contents
Frequently Asked Questions (FAQs) about fokus keyword: amicus brief
Who are the law professors that have filed the amicus brief?
Stephen M. Bainbridge from UCLA, Tamar Frankel from Boston University School of Law, Sean J. Griffith from Fordham Law School, Lawrence Hamermesh of Widener University Delaware Law School, M. Todd Henderson of the University of Chicago Law School, and Jonathan R. Macey of Yale Law School have filed the amicus brief.
What is the primary argument of the amicus brief?
The brief argues that for tokens listed on Coinbase to be considered investment contracts, there must be some contractual undertaking for investors. The professors support this claim through a historical examination of securities laws and case law, emphasizing that investment contracts have consistently required contractual undertakings to deliver future value.
How does Coinbase’s view align with the law professors’ stance?
Coinbase agrees with the law professors’ view that an investment contract can only be recognized if it involves an ongoing business enterprise with management having enforceable obligations to investors.
What is the SEC’s stance on investment contracts, and how does it differ from the law professors’ perspective?
The SEC believes that even in the absence of a contractual obligation, an arrangement might qualify as an investment contract. This view contrasts with the law professors’ interpretation, as they argue that a settled meaning of investment contracts requires contractual commitments to provide future value.
What historical laws are mentioned as an influence on current securities law?
The law professors refer to “blue sky laws” as an inspiration for the current framework of securities laws. These laws sought to protect investors against securities fraud and typically relied on contractual arrangements between issuers and investors.
5 comments
It’s about time some experts stepped in. these issues around tokens and investments are confusing. Need clarity ASAP! Howey test? blue sky laws? What next?
I’m totally with Coinbase on this. Contracts must be respected and SEC can’t just change things, can they? Super interesting.
Wow, these professors really know their stuff! makes u think about how complex law can be. what will SEC say to this?
So many big names frm law schools. Must be something serious. i wonder how this will affect other crypto platforms.
This is huge for the crypto community. But I’m still confused about some of the legal terms they used. Could someone explain in simple english?