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Coinbase has called on the Southern District of New York to reconsider its request for an interlocutory appeal in its ongoing legal battle with the Securities and Exchange Commission (SEC), using the SEC’s recent appeal in the Ripple case as a key argument. Coinbase’s attorneys sent an Oct. 5 letter to Judge Katherine Failla, emphasizing that the SEC’s decision to appeal in the Ripple lawsuit indicates the complexities and ambiguities of applying the Howey Test to digital assets.
The Howey Test determines whether a financial instrument can be classified as a security under U.S. law, and Coinbase’s legal team asserts that the SEC’s Ripple appeal is an admission that these criteria are unclear when it comes to cryptocurrencies. The attorneys argue that this uncertainty impacts the entire digital asset industry and warrants immediate appellate review of the SEC vs. Coinbase case.
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James Murphy, a financial services lawyer, noted the unusual delay in ruling on Coinbase’s April 2024 motion for interlocutory appeal, highlighting that such motions are typically resolved quickly. He commended Coinbase’s legal strategy of leveraging the Ripple appeal to push for the reconsideration of their appeal, given its broader implications for the crypto industry.
Meanwhile, the SEC has requested a delay in the discovery process, seeking an extension until February 2025 to provide documents related to Coinbase, which were initially due by October 2024. Additionally, a panel of judges criticized the SEC in September 2024 for its failure to provide Coinbase with clear rules on how digital assets should be regulated, a request the exchange made in 2022. Coinbase is also pushing for the Commodities Futures Trading Commission (CFTC) to release its communications with token issuers, believing this will clarify which digital assets qualify as securities.
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