Coinbase seeks interlocutory appeal regarding SEC’s pivotal query

Cryptocurrency exchange Coinbase is seeking the attention of a U.S. court to examine a specific issue raised by the Securities and Exchange Commission (SEC) in their ongoing legal battle. In a filing with the U.S. District Court for the Southern District of New York on April 12, Coinbase argued that the question at hand is clear and ready for immediate review, as there are no factual disputes involved. The exchange’s chief legal officer, Paul Grewal, explained in a post on X that the central issue revolves around whether an investment contract necessitates a contractual obligation. Coinbase believes that an investment contract requires post-sale obligations, while the SEC argues otherwise. This development follows the denial of Coinbase’s motion to dismiss the SEC’s case against them by U.S. District Judge Katherine Failla. The SEC alleges that Coinbase functions as an unregistered exchange, broker, and clearing agency. However, if the court approves the interlocutory appeal, it could have a significant impact on the case, which has been ongoing since June 2023. Coinbase claims that the SEC considers their crypto transactions as investment contracts, despite the absence of any alleged contractual obligations. The exchange asserts that the resolution of this legal question could substantially affect the course of the action. Grewal emphasized the early submission of Coinbase’s appeal request, which occurred just 17 days after the motion to dismiss was rejected. He justified this action by stating its importance to the broader crypto industry and the desire to resolve the dispute over crypto transactions promptly. In a separate civil lawsuit, Coinbase achieved a major victory when the United States Court of Appeals for the Second Circuit ruled in their favor, confirming that secondary sales of cryptocurrencies on their platform do not violate the Securities Exchange Act.