Crypto News: SBF Trial Gets Underway with the SEC v Coinbase Case also in Focus

Key Insights:

• The SEC case vs. Coinbase gathered momentum this week, with the SEC opposing the Coinbase motion to dismiss.
• Sam Bankman-Fried continued to grab the news headlines, with the SBF trial now underway.
• Beyond the courts, crypto-spot ETF-related news will influence BTC and ETH price trends.

SEC Opposes Coinbase Motion to Dismiss

On Tuesday, the SEC opposed the Coinbase (COIN) motion to dismiss (MTD). The SEC argued,

“Each crypto asset issuer invited investors – including purchasers on Coinbase’s platform – reasonably to expect the value of their investment to increase based on the issuer’s broadly disseminated plan to develop and maintain the asset’s value […]. This is the essence of an investment contract under Howey.”

The SEC went on to argue that Howey did not require investment contracts to include contractual undertakings to deliver future value or a contractual recourse to profits, income, and the assets of a business.

Last week, SEC Chair Gary Gensler gave testimony to the Financial Services Committee. The Howey test and investment contracts were a focal point for Republican Ritchie Torres. Rep. Torres called on Gensler to cite cases where the Court ruled the existence of an investment contract without a contract. The SEC Chair was unable to offer a response.

On Tuesday, Judge Torres denied the SEC motion for interlocutory appeal. Notably, Judge Torres said,

“[…] Ripple’s Programmatic Sales could not lead investors to reasonably expect profits from Ripple’s efforts.”

Investors await Judge Katherine Failla to rule on the Coinbase MTD. Crypto advocate and lawyer John E. Deaton considers the MTD ruling pivotal for the SEC v Ripple case and the US digital asset space.

After considering the SEC opposition filing, Deaton increased the odds of Judge Failla granting the Coinbase MTD, saying,

“Before the SEC filed its opposition to Coinbase’s Motion to Dismiss, I placed the odds of Coinbase winning at 40% […]. After reading the SEC Opposition, the odds have improved in Coinbase’s favor and stands, at least, at 50%. The SEC’s Opposition is lacking the most important area of all: the law.”

Deaton concluded,

“I believe Judge Failla could hand down the biggest loss to the SEC to date.”

SBF Case Gathers Steam in the First Week of Trial

During opening statements in the Sam Bankman-Fried (SBF) trial, Assistant United States Attorney Dana Rehnquist reportedly said,

“He had wealth, he had power, he had influence. But it was built on lies. He was committing a massive fraud, taking billions of dollars from thousands of victims. He had started FTX. He told customers it was safe. But he was taking it and spending it.”

SBF defense attorney Mark Cohen presented a different picture during opening testimony, saying,

“Suddenly billions in withdrawals. Sam didn’t run. The plane was going into the very eye of the storm. Consider his state of mind. Their case is a hindsight case. It’s not a crime to declare bankruptcy. The US points to business practices […].”

Legal experts expect the SBF case to last six weeks. The SBF team and state prosecutors selected 12 jurors and six alternates on Wednesday morning, allowing opening statements to proceed.

Technical Analysis

Bitcoin Analysis

BTC remained above the 50-day and 200-day EMAs, sending bullish price signals. Significantly, the 50-day EMA crossed through the 200-day EMA, signaling a bullish trend.

A BTC break above the $28,187 resistance level would give the bulls a run at the Monday high of $28,593.

Progress toward an SEC approval of one, some, or all of the BTC-spot ETF applications will likely fuel buyer demand for BTC. However, SEC v Coinbase (COIN) and Ripple case-related news also need consideration.

The 14-Daily RSI reading of 60.38 supports a BTC move to the $28,187 resistance level before entering overbought territory.

Ethereum Analysis

ETH remained below the 50-day and 200-day EMAs, sending bearish price signals.

An ETH move through the 50-day EMA would give the bulls a run at the 200-day EMA and $1,746 resistance level. Progress toward an SEC approval of an ETH-spot ETF would support a return to $1,700.

However, failure to move through the 50-day EMA would support a break below the $1,626 support level. An ETH drop below the $1,626 support level would bring sub-$1,600 into view.

The 14-Daily RSI reading of 50.32 indicates an ETH breakout from the 50-day EMA and a move to the 200-day EMA before entering overbought territory.