TechFlow reported that cryptocurrency lawyer James Murphy, also known as MetaLawMan, said on Twitter that law professors from Yale University, the University of Chicago, UCLA, Fordham University, Boston University, and Widener University recently filed an amicus brief supporting Coinbase, decisively undermining the U.S. SEC's "investment contract" theory.
The amicus brief traces the history of the meaning of "investment contract" before, during, and after the passage of the 1933 federal securities laws. Below are the scholars' conclusions:
1. "By 1933, state courts had established a standard interpreting 'investment contract' as a contractual arrangement granting investors a share in future revenues, profits, or assets of the seller."
2. After the 1946 Howey decision, "the consistent thread remains... that investors must be promised an ongoing contractual right to revenues, profits, or assets from the enterprise as a result of their investment."
3. "Every 'investment contract' identified by the Supreme Court involved a contractual promise granting residual equity interests in the enterprise."
Murphy concluded: "In my view, this amicus brief delivers a fatal blow to the SEC’s argument that secondary market trading of crypto tokens constitutes investment contracts."
Yesterday, it was reported that advocacy groups including the Blockchain Association, Crypto Council for Innovation, Chamber of Digital Commerce, DeFi Education Fund, Chamber of Progress, and Consumer Technology Association, along with venture capital firms such as a16z crypto and Paradigm, and six academics, collectively submitted six briefs (excluding the brief by Senator Cynthia Lummis).
