The long-running legal battle between Coinbase and the U.S. Securities and Exchange Commission (SEC) continues to provide new twists and turns in what could be a pivotal case in the history of crypto regulation. In a recent development, the US crypto exchange has now filed a response to the commission’s motion against an initial motion for interlocutory appeal in the controversial legal matter.
Coinbase sends fiery response to SEC as appeal saga thickens
April 12, Coinbase approach US court seeks clarification on whether an investment contract can be concluded without after-sales obligations. The crypto exchanges consider this issue a “controlling question of law” central to its ongoing SEC filing.
In response, the SEC argued that there was no need for the court to certify such an interlocutory appeal since existing securities regulations, particularly the Howey test, have proven sufficient for decades. In particular, the Commission stated that no court had ever requested an after-sales contract following the use of the test in the past.
However, in a new way Memorandum of law submitted on Friday, May 24, Coinbase responds to this statement by saying that the interlocutory appeal revolves around a new question in that “no appeals court has considered whether a digital asset transaction resulting in no post-sale obligation can be an “investment contract” according to Howey.” .
Additionally, the exchange accuses the SEC of avoiding the “determining question of law” in its countermotion by diverting attention to the controversy over the application of the Howey test to cryptocurrency transactions rather than the petition from Coinbase asking for advice on applying Howey to digital. assets.
Coinbase seeking ‘elegant’ legal victory
Finally, in Coinbase’s latest petition, the exchange reiterated the potential importance of this interlocutory appeal on the outcome of its lawsuit with the SEC. The defendant’s lawyers pointed out that if a successful outcome occurs, more than 70% of the complaints filed with the SEC could be invalidated.
A statement from the petition read:
Most of the SEC’s 116 document requests recently served and all of its 32 requests for admission, 10 third-party subpoenas, and 9 requests for inspection relate to Coinbase’s platform and Prime services rather than the unrelated staking program. This portends a discovery process, motion practice, and trial heavily oriented toward claims centered on the “ecosystems” of 12 distinct tokens—claims that are intended to consume significant judicial and partisan resources but which, with interlocutory examination, could be outside the scope. case.
On June 6, 2023, the SEC accused Coinbase accused of operating as an unlicensed securities exchange, broker and clearing agency. Given Coinbase’s status as the largest US exchange, many believe this will have massive effects on the regulation of the country’s booming crypto industry.
Featured image from Yahoo Finance, chart from Tradingview
