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Coinbase Strengthens Interlocutory Appeal in SEC Case, Cites Ripple Ruling

Coinbase (crypto exchange) CFN
  • Coinbase refiles its motion for interlocutory appeal in the SEC case, citing the Ripple ruling.
  • The crypto exchange seeks clarity on the Howey Test’s application to digital assets.
  • Coinbase argues the SEC’s appeal in Ripple’s case shows ambiguity in the Howey Test.

Coinbase has refocused its efforts on seeking an interlocutory appeal in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). The cryptocurrency exchange recently filed a request with Judge Katherine Polk Failla, urging the court to reconsider its April motion for an appeal. 

This renewed push comes after the SEC appealed a similar ruling in the Ripple case, which could have significant implications for how the Howey Test is applied to digital assets.

The Howey Test, established in 1946, has long been used to determine whether an asset qualifies as a security under U.S. law. Coinbase contends that the test’s application to digital assets, particularly secondary market transactions, remains unclear. 

By referencing the SEC’s appeal in the Ripple case, Coinbase argues that the commission itself has acknowledged the ambiguity surrounding the criteria laid out in the Howey Test.

The appeal comes after Judge Analisa Torres ruled in favor of Ripple in July 2024, a case that has attracted widespread attention within the crypto community. Ripple’s victory has provided Coinbase with a strategic point of reference in its own case, where the application of the Howey Test could be key to the outcome. 

Coinbase’s legal team believes that further scrutiny of the SEC’s stance on the test is necessary for a fair adjudication of digital asset transactions.

In April, the SEC opposed Coinbase’s initial motion, arguing that there was no substantial ground for differing opinions on the matter. 

However, Coinbase maintains that the Ripple case has set a precedent, reinforcing the need for the Second Circuit to revisit the Howey Test’s application to digital assets. The exchange hopes this will offer a more comprehensive legal interpretation of the SEC’s position.

While Coinbase may have strengthened its argument by aligning with the Ripple case, it remains uncertain whether the court will grant the appeal. The outcome of this case, along with Ripple’s ongoing litigation, will likely shape the future regulatory landscape for cryptocurrency in the U.S.

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