Coinbase urges court to reconsider appeal, cites SEC vs Ripple

Attorneys for Coinbase urged Southern District of New York judge Katherine Falia to reconsider an interlocutory appeal filed on behalf of the exchange in April 2024 — citing the Securities and Exchange Commission’s (SEC) recent notice of appeal in the Ripple lawsuit.

According to an Oct. 5 letter, lawyers for Coinbase argued that the SEC’s appeal is an admission that the criteria listed in the regulator’s Howey Test — a set of conditions that must all be fulfilled to classify a financial instrument as a security — were ambiguous and warranted closer examination.

The attorneys also asserted that the appeal signifies the “industry-wide significance” of the application of the Howey test, warranting a more thorough legal review of the facts in the ongoing Securities and Exchange Commission vs. Coinbase Inc. and Coinbase Global lawsuit. Coinbase’s legal counsel stressed:

“The SEC has conceded, and now reconfirms by its appeal in Ripple, that the issues presented by Howey’s application to secondary-market digital asset transactions are of “industry-wide significance.” Prompt and complete appellate review is urgently needed.”

Financial services lawyer James Murphy remarked that it was highly unusual that the court did not rule on Coinbase’s motion for interlocutory appeal when it was filed in April — noting that these motions are usually arbitrated quickly. The attorney also praised the legal team’s strategy of leveraging the recent SEC appeal in the Ripple case to push for an interlocutory appeal.

Related: Coinbase to delist non-compliant stablecoins under EU MiCA rules

Other recent developments in SEC vs. Coinbase

In a Sept. 18 filing, the Securities and Exchange Commission petitioned the court for a February 2025 extension to produce discovery documents for Coinbase. The documents were initially scheduled to be presented to the court by Oct. 18, 2024.

On Sept. 24, a panel of judges described the SEC’s refusal to provide Coinbase with clear rules and guidelines for digital assets — a request the exchange made to the government regulator in 2022 — as lacking clear rationale.

More recently, in Oct. 2024, Coinbase petitioned the court to compel the Commodities Futures Trading Commission (CFTC) to release its communications with token issuers, which the Coinbase legal team believes will provide clarity on which digital assets qualify as securities.

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