Coinbase filed a motion to appeal a judge's decision last month decision made last month, which allowed a lawsuit involving the Securities and Exchange Commission (SEC) and the exchange to proceed without being dismissed.
By filing the interlocutory appeal, Coinbase is claiming substantial grounds for differences of opinion, according to a person familiar.
It is unlikely that an interlocutory appeal, which is filed before the end of a proceeding, will be approved. The SEC tried to file an interlocutory appeal in its case against Ripple last year but was ultimately rejected.
Judge decides not to dismiss
In last month's decision, Judge Katherine Polk Failla of New York disagreed with Coinbase's point that investment contracts need a formal contract. When a customer buys a token on Coinbase, she is not just buying a token, but she is buying into that "token's digital ecosystem," Failla said.
In its motion, the exchange will appeal whether the SEC has authority over digital asset transactions as investment contracts, even when there is no contract between the issuer and investor, a person familiar with the matter said.
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Coinbase is requesting that Judge Failla grant them permission to appeal. Should the appeal be allowed to proceed, the remainder of the case would be put on hold in the trial court. The exchange would then await a resolution from the Second Circuit "to resolve this conundrum," the same source said.
If and only when the Second Circuit rules on the case, it would then be returned to the trial court with guidance from the Second Circuit on this specific question. At that point, the court would proceed with whatever remained of the case.
Next, the case proceeds to trial and will be presented to a jury, though the process wouldn't likely start until 2025. The SEC and Coinbase would also have to submit a proposed case management plan before April 19.
Coinbase was sued by the SEC last year for allegedly operating as an unregistered exchange, broker and clearing agency. The regulator also took issue with Coinbase's staking and wallet services.
Last month, Judge Failla sided with Coinbase on the wallet part and dismissed the SEC's claim.
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