Coinbase is stepping up its legal battle with the U.S. Securities and Exchange Commission (SEC), asking a New York court to approve an interlocutory appeal. The company’s legal team points to recent events in the Ripple case to strengthen its argument that the SEC’s use of the Howey Test remains unclear. Coinbase seeks guidance from an appellate court on how this test applies to digital assets.
The Howey Test, which helps determine whether an asset qualifies as a security, is at the heart of legal disputes involving cryptocurrency firms. Coinbase’s lawyers argue that the SEC acknowledged “confusion” regarding the test in the Ripple case, highlighting the need for a thorough judicial review. In their October 4 letter, Coinbase’s legal team stated that an early appeal could clarify how digital asset transactions are classified. They emphasized that the SEC’s litigation strategy has created uncertainty within the cryptocurrency sector.
Also Read: SEC Files Appeal in Ripple Case, Docketed as Case No. 24-2648 Amid Internal Shake-ups
Ripple Case Strengthens Coinbase’s Position
Coinbase’s legal team believes the SEC’s actions in the Ripple case strengthen their case for an early appeal. The SEC recently appealed Judge Analisa Torres’ ruling that some XRP token sales were not considered securities under the Howey Test. With the new development in the Ripple vs SEC case, Coinbase remains hopeful Judge Failla may reconsider their motion. Coinbase sees the SEC’s moves as a sign of broader issues with how securities laws are applied to digital assets.
Ripple is planning its next legal steps, with Chief Legal Officer Stuart Alderoty considering a cross-appeal to counter the SEC’s actions. Ripple, which gained prominence quickly, has faced several challenges from the SEC. The company was fined $125 million for improper institutional sales of XRP tokens.
The delay in Judge Failla’s ruling on Coinbase’s interlocutory appeal has drawn attention. Crypto lawyer James Murphy called the delay “astounding,” noting that such motions are typically ruled on quickly. With growing legal uncertainty around cryptocurrency regulations, these cases are becoming crucial to watch.
Conclusion
Coinbase’s request for an interlocutory appeal marks a key point in its legal conflict with the SEC. As the Ripple case unfolds, its outcome could significantly impact the broader cryptocurrency industry. The decisions made in these cases may offer much-needed clarity on how digital assets are regulated under U.S. securities law.
Also Read: Coinbase Files Motion Seeking CFTC Documents in SEC Lawsuit
