Coinbase’s Interlocutory Appeal Bid Rejected by SEC

The US Securities and Exchange Commission (SEC) has criticized Judge Annalisa Torres' decision against Ripple, rejecting Coinbase's interlocutor appeal.

In a May 10 filing, the SEC argued that the court should not entertain Coinbase's bid to reevaluate the application of securities laws to digital assets.

SEC Says Coinbase Doesn't Like Hawaii Challenge

Coinbase, in its petition for interlocutory review, argued that the SEC's application of the Hawaii test to cryptocurrency assets clouded the definition of securities. The exchange has grown significantly on Judge Torres' decision in the Ripple case. At that time, the judge ruled that the XRP token was not a security and the sale of the program on exchanges that did not create investment contracts.

However, the SEC denied Coinbase's request, stating that no court had followed Judge Torres' decision. The regulator asserted that Coinbase's attempt to frame an interlocutory appeal around a “regulatory question” was an attempt to control its interpretation of the case.

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“Coinbase's attempt to shoehorn an appeal into a certified claim under 28 USC § 1292(b) is self-defeating. The parties cannot create a certified case by jettisoning and then saving the claims at issue in the original order,” the SEC wrote.

The SEC also argues that the interlocutory review is invalid simply because Coinbase proposed a new legal requirement. In addition, the agency led by Gary Gensler stated that Coinbase may simply hate the long-term answer given by the courts. According to the regulator, Coinbase may have structured its business in ways that create challenges for compliance with existing security regulations.

Despite the order's incontrovertible conclusions, Coinbase continues to insist that Howey's reading of Coinbase has not been accepted by any court and, more complicatedly, that there was no fair notice of the framework that applied to the behavior, Coinbase continues to insist, as a result of interlocutory review. , that[t]”The digital asset industry operates under an unbearable cloud of uncertainty, or a ‘cloud of legal uncertainty,'” the SEC explained.

Coinbase's chief legal officer, Paul Grewal, responded by saying the SEC's move contradicted itself. Grewal shared screenshots showing various arguments filed by the SEC in the same appeal against Ripple Labs.

“At least let's have a real conversation. Forget about fragmentation across agencies, districts, and other areas. “There is not even a consensus between the district judges in the same court in Foley Square about how and digital assets,” he added.

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Meanwhile, the ongoing legal battle between the regulatory agency and the cryptocurrency exchange will take another step with this filing. The agency previously accused Coinbase of operating as an unregistered exchange and raised concerns that the stock program could violate securities laws.