In a significant legal development, Coinbase has requested the judge overseeing its ongoing litigation with the SEC to grant an interlocutory appeal. This comes in the wake of the SEC appealing a ruling in its separate case against the web3 payments firm Ripple.
Coinbase's initial request for an interlocutory appeal was submitted in early April. The appeal seeks the Second Circuit of Appeals to evaluate a crucial question: how the Howey Test, a standard established by a 1946 Supreme Court ruling, applies to digital assets. Coinbase’s lawyers stated, "The division among Congress members, Senators, and regulatory agencies reflects the complexity of this matter, and varying judicial outcomes emphasize this point."
One month after Coinbase's request, the SEC filed a letter opposing the appeal, arguing that there was "no substantial ground for difference of opinion". Despite this, Judge Katherine Polk Failla has not yet made a ruling on Coinbase's appeal request.
Now, Coinbase is again urging Judge Failla to deliberate on its interlocutory appeal, especially in light of the SEC's recent appeal in the Ripple case. Coinbase argues that reviewing both cases concurrently would provide the Second Circuit with a comprehensive understanding of the legal and practical implications of the SEC's position.
Coinbase's attorneys noted, "The SEC has acknowledged, and now reaffirms through its Ripple appeal, that the issues related to Howey's application to secondary-market digital asset transactions are of 'industry-wide significance'. Prompt and thorough appellate review is critically necessary."
Although interlocutory appeals are seldom granted, the SEC's actions in the Ripple case bolster Coinbase's argument. Cryptocurrency attorney James "MetaLawMan" Murphy referred to this move as a "smart strategy" and expressed astonishment at the lack of a ruling on Coinbase’s initial motion, which is typically addressed promptly.
As of now, both Coinbase and the SEC have not provided comments on the situation.
