Coinbase has taken a strong stance in its battle against the United States Securities and Exchange Commission (SEC) and has reached a notable conclusion: “The SEC is trying to avoid the Howey test.” In a memorandum filed on May 24, Coinbase supported its interlocutory appeal, which challenges a single ruling in an ongoing case. This document was a response to the SEC’s opposition to Coinbase’s original request for an appeal. Coinbase initially filed its interlocutory appeal on April 12, disputing a ruling on March 27 that claimed the SEC had sufficient grounds to argue that Coinbase’s staking program was an unregistered securities offering.
Coinbase argued that the main issue at stake in the SEC suit is whether an investment contract requires a contractual undertaking. The SEC, in its opposition to Coinbase’s appeal, claimed that no court had ever required a post-sale contractual undertaking for the application of the Howey test. However, Coinbase countered in its May 24 filing that this disagreement makes the issue suitable for a court decision rather than the “inevitable application of settled law.” Coinbase also pointed out inconsistencies between the SEC’s claims in its case against Ripple and those in Coinbase’s case. Additionally, Coinbase highlighted that the House of Representatives recently passed a bill that would limit the SEC’s jurisdiction, further undermining the SEC’s claims.
The SEC initially filed a lawsuit against Coinbase in June 2023, accusing the company of violating securities law. Alongside the staking program allegations, the SEC also claimed that 13 of the cryptocurrencies listed on Coinbase were securities. In response, Coinbase has proactively defended itself and the crypto industry. In June, shortly after the SEC lawsuit was filed, Coinbase launched the Stand With Crypto campaign, which now includes a political action committee.
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