Coinbase Takes a Page from Binance’s Playbook: Will It Work Against the SEC?

• Coinbase seeks to file an interlocutory appeal in the lawsuit against the SEC.
• The exchange wrote a letter to Judge Katherine Failla. 
• Coinbase referred to Judge Amy Jackson’s ruling in the Binance vs. SEC case.

Buoyed by a recent court ruling in favor of Binance, Coinbase has appealed in a letter to Judge Katherine Polk Failla, urging her to reconsider its request for an interlocutory appeal in its own ongoing legal battle against the Securities and Exchange Commission.

The leading American crypto trading platform cited Judge Amy Berman Jackson’s ruling in the Binance case, arguing that conflicting rulings on the Howey Test, the legal framework for determining whether an asset is a security, necessitate a higher court’s intervention to clarify the regulatory landscape for digital assets.

Fox journalist Eleanor Terrett detailed the events leading to this letter. In April, Coinbase initially sought permission from Judge Failla to file an interlocutory appeal, arguing that there are “substantial grounds for differences of opinion” regarding the application of the Howey Test to cryptocurrencies. This request followed Judge Analisa Torres’ ruling that XRP could not be considered a security when sold to retail investors.

The SEC, however, opposed the appeal, stating that “no court has followed” Judge Torres’ ruling. Coinbase’s position gained traction when Judge Jackson, in the Binance case, reaffirmed Judge Torres’ ruling, stating that the Howey Test does not apply to BNB and emphasizing the importance of considering the “economic reality” of token transactions.

Coinbase’s chief legal officer, Paul Grewal, addressed the SEC, asserting that “liability should not depend on which court one gets sued in or which judge is assigned.” He added:

“The result of the SEC’s litigation-focused approach to crypto regulation is that market participants now face different rules, not only in different courts in this District, but in different federal courts around the country.”

While Judge Failla has not yet ruled on Coinbase’s renewed appeal, the exchange hopes that Judge Jackson’s ruling in the Binance case will influence her decision. The SEC’s recent setbacks, including the partial dismissal of its claims in the Binance lawsuit, indicate a potential shift in the regulatory landscape for cryptocurrencies.