Key Points
- Coinbase has asked the judge to approve an interlocutory appeal in its ongoing SEC lawsuit, following the SEC’s appeal of the Ripple case ruling.
- The crypto exchange argues that presenting both cases to the Second Circuit simultaneously would provide a more complete picture of the legal implications surrounding digital asset regulation.
Coinbase Seeks Early Appeal Amid SEC’s Ripple Case Appeal
In a significant development in the ongoing legal battle between Coinbase and the U.S. Securities and Exchange Commission (SEC), the cryptocurrency exchange has renewed its request for an interlocutory appeal. This move comes in light of the SEC’s recent decision to appeal its ruling in a separate case against Ripple, a web3 payments firm.
Coinbase’s attorneys submitted a letter on October 5, 2024, to Judge Katherine Polk Failla of the Southern District of New York, urging her to reconsider the exchange’s April 2024 request for an interlocutory appeal. The lawyers argue that the SEC’s appeal in the Ripple case underscores the “industry-wide significance” of how the Howey Test – the traditional standard for determining what constitutes a security – applies to digital assets.
The Howey Test and Its Implications for Crypto
The crux of Coinbase’s argument centers on the application of the Howey Test to secondary-market digital asset transactions. The exchange contends that the SEC’s appeal in the Ripple case demonstrates the ambiguity surrounding this issue and the need for a more thorough legal review.
Coinbase’s legal team emphasized in their letter:
“The SEC has conceded, and now reconfirms by its appeal in Ripple, that the issues presented by Howey’s application to secondary-market digital asset transactions are of ‘industry-wide significance.’ Prompt and complete appellate review is urgently needed.”
Seeking a Comprehensive Review
By requesting an interlocutory appeal, Coinbase aims to ensure that the Second Circuit Court of Appeals has “as complete a picture as possible” by presenting its case alongside the SEC’s appeal in the Ripple case. The exchange argues that this approach would provide the court with a full account of the legal and practical implications of the SEC’s position on digital asset regulation.
The ongoing legal saga began in June 2023 when the SEC sued Coinbase, accusing the company of selling unregistered securities. Since then, the case has highlighted the complex and evolving nature of cryptocurrency regulation in the United States.
As the crypto industry awaits Judge Failla’s decision on Coinbase’s renewed appeal request, the outcome of this case, along with the Ripple lawsuit, could have far-reaching implications for the future of digital asset regulation in the country.
