Law of Code

On August 4, 2023, Coinbase filed a brief in support of its motion to dismiss the SEC's lawsuit. This podcast provides an audio version of the brief, along with key takeaways and points made within it.

Show highlights:

[1:00] Preliminary Statement

[6:30] Background on the SEC's charges

[11:30] Coinbase's argument for dismissal

[13:00] Because the complaint alleges no contractual undertaking beyond the point of sale, no investment contract is pleaded

[22:00] The SEC misreads Howey in asserting that a scheme without a contractual undertaking will suffice

[29:00] Recent cases do not support the SEC's efforts to use scheme as an escape hatch from statutory text

[33:00] The SEC's effort to portray a simple asset sale as a security is an unprecedented stretch

[41:00] Any future value that token purchasers on Coinbase and through Prime may hope to reap is not in the profit, income or assets of the issuers business

[42:00] The Major Questions Doctrine compels rejection of the SEC's construction of investment contract

[49:00] Coinbase is entitled to judgment on the claim that it acts as an unregistered broker through Wallet

[50:00] Coinbase is entitled to judgment on the claim that its staking services constitute unregistered securities

Joshua B. Sterling is a Partner at Jones Day where he represents financial services, energy, fintech, agriculture and other companies in matters before the CFTC, the SEC, and other financial regulators. A former senior regulator, Josh was previously the Director of the CFTC’s Market Participants Division. In that role, he oversaw the 3,300 financial firms worldwide registered with the CFTC to participate in the global derivatives markets. 

Show highlights:

[1:00] Josh's introduction to Bitcoin

[5:00] BitMEX case

[11:00] 2008 financial crisis

[16:00] Finance and Web3

[20:00] Role of CFTC in crypto

[25:00] Role of the SEC

[29:00] How to improve the SEC's results

& much more.

We also discuss the book The Price of Time: The Real Story of Interest.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Elliott Z. Stein (@NYCStein) is a Senior Litigation Analyst at Bloomberg Intelligence. He previously worked in private practice on structured finance/capital markets litigation, white-collar crime and related capital markets matters.

Show highlights:

[1:30] Attending Coinbase hearing on Jan 17

[6:00] Why Elliott expects Coinbase to win

[12:00] Judge Failla's concern with the SEC's position

[16:00] SEC's strongest arguments

[18:00] When to expect a decision

[20:00] Supreme Court narrowing Howey

[23:00] What surprised Elliott about the Coinbase strategy

[27:00] Ripple case

[31:00] Elliott's career

& much more.

Show links:

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Eric Hess (@hess_legal) is Founder & Managing Counsel at Hess Legal Counsel, a cybersecurity SaaS platform and consulting company, and hosts The Encrypted Economy podcast. Eric has over twenty years of experience acting as senior in-house counsel, general counsel or senior management for exchanges, broker dealers, and financial services technology providers.

In this episode, we’ll be exploring his recent paper Bridging Policy and Practice: A Pragmatic Approach to Decentralized Finance, Risk, and Regulation.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Evan Zinaman (@zin_esq) is the Founder & Principal at Trailbreak, a boutique transactional firm providing tech-fluent corporate, regulatory, product and IP counsel and strategic advice to startups, builders and investors throughout the crypto space. Evan also serves as special crypto counsel to clients of Reed Smith, advising as part of an industry-spanning, global blockchain group that he helped found.

In this episode, we discuss Evan’s paper, “Where the Rubber Meets the Road: A MEV-Aware, Functionalist Review of OFAC Risk ‘on the Base Layer’”.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Rodrigo Seira (@RSSH273) is Special Counsel at Paradigm. Prior to joining Paradigm, he was outside counsel to crypto investors and entrepreneurs at Cooley LLP.

Brendan Malone (@brendanpmalone) is a Policy Manager at Paradigm. Prior to joining Paradigm, Brendan worked at the Federal Reserve where he focused on policy issues for financial market infrastructures.

Rodrigo and Brendan launched the Paradigm Policy Lab. The goal of the Lab is to be a gathering place for academics, policy experts, lawyers, and technologists to study how to address the biggest policy challenges in crypto. In this conversation, they share the origin story, goals and projects underway at the Lab.

Rodrigo mentions this book: Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages is an academic book by Carlota Perez.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

William O’Rorke (@williamororke) is the Founding Partner of ORWL, a leading law firm assisting clients with businesses in the crypto space, VASPs and general Web3 services. He leads the regulatory practice at ORWL and is the head of the legal committee at ADAN, a French crypto association.

In this conversation, we discuss the most significant impacts MiCA will have on projects in the crypto space, the information White Papers must include under MiCA, what is not covered by the EU's landmark regulation and much more.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Zach Rosenberg (@MeatEsq) is an attorney and principal at Rosehill Legal, a boutique transactional firm assisting early-stage founders, largely in the crypto space, with structuring, funding, building, and deploying products and networks.

He previously worked as an M&A Tax Director at PWC where he spent eight years advising large private equity firms and public company clients on large acquisitions, divestitures, and restructuring transactions. 

You can connect with Zach via email at [email protected].

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Ryne Miller is the founder and managing partner of Miller Strategic Partners LLP, a law firm specializing in:

1. Regulatory advice and investigations counsel for the traditional trading and markets industry;

2. Regulatory and strategic advice for digital asset and blockchain companies; and

3. Crisis and incident response management.

Ryne was previously General Counsel at FTX US, a Partner at Sullivan & Cromwell and Legal Counsel to Chairman Gary Gensler while at the CFTC, during the CFTC’s Dodd Frank rule-writing program. 

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.

Jolie Yang (@JolieYang) is a former legal partner to Coinbase's product, engineering, and design teams on its Web3 initiatives, such as self-custodial wallet, decentralized identity, digital assets, as product counsel. While at Coinbase, Jolie was part of the team that launched Base. Prior to Coinbase, Jolie was an attorney at Davis Polk and Skadden, Arps.

Show highlights:

[4:00] Working on Coinbase's IPO

[7:00] Building Base

[11:30] Potential Token for Base?

[16:00] How Base works

[23:00] Decentralization for a project incubated by a centralized institution

& much more.

Disclaimer: Jacob Robinson and his guests are not your lawyer. Nothing herein or mentioned on the Law of Code podcast should be construed as legal advice. The material published is intended for informational, educational, and entertainment purposes only. Please seek the advice of counsel, and do not apply any of the generalized material to your individual facts or circumstances without speaking to an attorney.