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The judge, who earlier this week listened to Coinbase’s (NASDAQ:COIN) request to have the Securities and Exchange Commission lawsuit dismissed, is likely to make a decision in the next three months, according to a Citi analyst.
“Given the stature of the case, we agree with the notion that this dispute is unlikely to be solved on motions alone—likely pushing the summary judgment phase >1 year,” Citi analyst Peter Christiansen wrote in a note on Friday. “We remain neutral/high-Risk purely on regulatory risk, given any potential ruling can have significant impact on the company’s future.”
The legal analysis comes after Judge Katherine Polk Failla said on Wednesday in New York that she would not make a decision from the bench after hearing five hours of arguments from both sides. In early June, the SEC filed a lawsuit against cryptocurrency exchange Coinbase (COIN), alleging that it’s operating as an unregistered securities broker.
While Citi’s Christiansen believes that the case isn’t likely to be resolved through motions alone, he does outline potential rulings the judge may make. The Citi analyst also raised his price target on Coinbase (COIN) to $151 from $90.
If Judge Failla denies Coinbase’s (COIN) request for the lawsuit to be dismissed, it likely prompts the discovery phase for a year or more until it reaches summary judgement, aocording to Citi’s Christiansen, who cited legal expert James Murphy.
In the most bullish scenario, the court grants Coinbase’s (COIN) motion to dismiss with prejudice, though the SEC can file an appeal. In another scenario, the court could grant Coinbase’s motion to dismiss without prejudice, which means the SEC can amend its complaint to address any deficiencies.
The fourth scenario would be that the court grants Coinbase’s (COIN) motion in part, which likely splits the SEC’s complaint, dismissing one part as another area moves to discovery, according to Citi’s Christiansen.
