Coinbase Requests Interlocutory Appeal in Ongoing Legal Battle with the SEC

This request follows Coinbase's original filing in April, nearly seven months ago. Coinbase aims to have the Appellate Court review the application

Coinbase has filed a request with the court for an interlocutory appeal in its ongoing legal battle with the Securities and Exchange Commission (SEC) over the application of the Howey Test to secondary-market digital asset transactions.

This follows Coinbase’s initial filing in April, which sought to have the Appellate Court review the application of the Howey Test, a critical standard for determining securities classification.

Coinbase filed a new letter on October 4 to Judge Katherine Polk Failla, renewing its request for an interlocutory appeal. This comes after the SEC filed a notice of appeal in the Ripple case, arguing that the ruling contradicts Supreme Court precedents and securities regulations.

Coinbase argues that its own appeal should proceed to the Second Circuit simultaneously with the SEC’s appeal. According to the exchange, this alignment would provide the court with a more comprehensive view of the SEC’s legal strategy.

The exchange argues that granting its request for an interlocutory appeal would ensure that the Second Circuit fully understands the SEC’s litigation approach. According to the firm, this is essential since the SEC recently acknowledged that its position has caused “confusion.”

“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,'” Coinbase argued.

Coinbase also highlights the Second Circuit’s recent decision in the LBRY case, which overturned a lower court ruling that had applied the Howey Test to digital asset offerings. Coinbase argues that this decision further supports its request for an interlocutory appeal.

“The Second Circuit’s recent decision in LBRY also highlights the need for the Second Circuit’s guidance on Howey’s application to digital assets,” the exchange stated.

Cryptocurrency lawyer James Murphy commented on Coinbase’s legal strategy, expressing surprise at the court’s delay in ruling on the original motion. However, he believes that the SEC’s appeal in the Ripple case could strengthen Coinbase’s argument going forward.

“It is astounding that Judge Failla never ruled on Coinbase’s original motion for interlocutory appeal filed back in April. Those motions are normally ruled on very quickly. The SEC’s appeal in Ripple just strengthened Coinbase’s argument,” Murphy stated.

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