Recently, Cryptocurrecy Exchange, one of the most well-known bitcoin exchanges, lost in court against the U.S. Securities and Exchange Commission (SEC). However, it has since made significant progress. A U.S. judge turned down Coinbase’s request to throw out the Exchange case against the company, which was sent just last month. This was a setback.
Paul Grewal, Coinbase’s Chief Legal Officer, said on X that the company has sent a brief to the Court asking for permission to file an en banc appeal in the present Securities and Exchange Commission case. The main question of the brief is whether a “investment contract” needs to have a contractual part.
Coinbase Faces Failla’s Denial Impact.
Based on Judge Rakoff’s decision in the Terra case, Coinbase asked Judge Failla to throw out the SEC’s action. However, Judge Failla refused. Judge Rakoff said that some digital assets might be investment contracts under the Howey test if they are part of a “broader ecosystem.”
Coinbase is sure that the Howey test’s application to digital assets is a major legal issue that needs to be settled before an interlocutory appeal can be granted. This is shown by the recent motion that asked Judge Failla for permission to file an interlocutory appeal on her recent decision about investment contracts.
The SEC has used similar arguments in other cases, such as the Ripple lawsuit, where it recognized that there was a “controlling question of law” with good reasons for different opinions and stressed that it was “industry-wide in significance.” That’s why Grewal said Coinbase isn’t the only company that feels this way.
The new things that Coinbase has done could change how the Securities and Exchange Commission case goes: When the Second Circuit Court makes a ruling, the first trial is put on hold until the case is over.
