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The judge, who earlier this week heard Coinbase's statement (NASDAQ: CURRENCY) request that the Securities and Exchange Commission's lawsuit be dismissed, will likely make a decision in the next three months, according to a Citi analyst.
“Given the height of “In the case, we agree with the idea that this dispute is unlikely to be resolved on motions alone, which will likely push 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, as any potential failure can have a significant impact on the future of the company.”
The legal analysis comes after Judge Katherine Polk Failla said 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 operates as an unregistered securities broker.
While Citi's Christiansen believes the case is unlikely to be resolved through motions alone, he does outline possible rulings the judge could make. The Citi analyst also raised his price target on Coinbase (COIN) to $151 from $90.
If Judge Failla denies Coinbase's (COIN) request to have the lawsuit dismissed, it will likely trigger the discovery phase for a year or more until it reaches summary judgment, according to Citi's Christiansen, who cited legal expert James Murphy .
In the most optimistic scenario, the court grants Coinbase's (COIN) motion to dismiss with prejudice, although the SEC can file an appeal. In another scenario, the court could grant Coinbase's motion to dismiss without prejudice, meaning the SEC can amend its lawsuit to address any deficiencies.
The fourth scenario would be for the court to grant Coinbase's (COIN) motion in part, which would likely split the SEC's complaint, dismissing one part while another area moves toward discovery, according to Citi's Christiansen.
