Coinbase is seeking an appeal on a specific issue in its case with the U.S. Securities and Exchange Commission (SEC), its long-running legal battle target.
The closely watched litigation began in June 2023. In an appeal motion filed on April 12, the US exchange sought to clarify constitutional legal issues surrounding allegations that it operated as an “unregistered securities trading venue, broker-dealer, and clearing agency.”
Overall, Coinbase appears to be pursuing another strategy to undermine the SEC’s petition after the court denied the exchange’s motion to dismiss the charges.
Coinbase, the largest cryptocurrency exchange in the United States with 73 million users, has been vocal about the need for a clear regulatory framework for cryptocurrencies while harshly criticizing the SEC’s ongoing crackdown on the digital asset industry.
Coinbase appeals specific issues
Typically, a legal appeal is made after a trial is over or a lower court has made a final decision, but in the case of a stage issue appeal, a party appeals specific issues or decisions before the entire case is concluded.
In the SEC’s case against Coinbase, the defendants are seeking an examination of what investment contracts mean in cryptocurrency transactions.
Coinbase said the appeal complies with all legal requirements. First, the exchange claims there is a "controlling legal issue" as to whether an investment contract can be formed based on a transaction without post-sale obligations.
In addition, Coinbase highlighted the “substantial reasons for the difference of opinion” on the issue, particularly regarding the application of the Howey test to cryptocurrency trading. Finally, the U.S. exchange said that a review of the issue could undermine the SEC’s main allegations in the court case between the two parties, making it necessary to appeal the case.
Next, the Court will review this petition for a specific issue appeal and upon certification, shall refer the controlling legal issue to the Court of Appeal for appropriate resolution or guidance.
Coinbase Chief Legal Officer's Appeal Crucial to US Crypto Industry
Commenting on Coinbase’s latest appeal motion, the exchange’s chief legal officer Paul Grewal said that specific issue appeal motions are critical to the cryptocurrency industry, especially in the face of the SEC’s “unfair” enforcement actions due to the lack of a legal regulatory framework.
Grewal said:
“We requested to file our appeal sooner than usual because of the critical importance of this to our industry. The SEC’s actions against us and other digital asset companies go far beyond the legal authority granted by Congress and cast an unfair shadow on digital asset innovation in the United States.”
The cryptocurrency lawyer also expressed confidence in the sustainability and growth of digital assets, while reiterating Coinbase’s commitment to developing clear operating rules and regulations for the U.S. cryptocurrency industry.
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The total market value of cryptocurrencies on the daily chart is $2.239 trillion
