- The SEC has moved to stop Coinbase’s appeal to the court in the ongoing litigation.
- Coinbase applied for permission to ask the Second Circuit Court of Appeals if the Howey Test should apply to digital assets.
- Coinbase accused the SEC of creating a “new legal test” that would fit cryptocurrencies into existing securities.
The U.S. Securities and Exchange Commission (SEC) has moved to stop Coinbase’s appeal to the court in the ongoing litigation. The crypto exchange reportedly applied for permission to ask the Second Circuit Court of Appeals if the Howey Test should apply to digital assets.
To stop Coinbase’s appeal, the SEC filed on Friday that the crypto exchange has not successfully argued that the appeal is needed. However, the Howey Test question stems from the SEC’s accusation that Coinbase operates as an unregistered broker, exchange, and clearinghouse in the U.S.
Meanwhile, the SEC’s stand revolves around some cryptocurrencies being securities. Under such conditions, the affected cryptos would meet the Howey Test, requiring Coinbase to get the SEC’s approval before making them available for customers to trade.
According to the filing by Coinbase, the SEC is attempting to create a “new legal test” that would fit cryptocurrencies into existing securities precedent already resisted by a district judge. However, the SEC argued that the crypto exchange “remains unable to advance a single coherent version of this theory, which it now claims presents a controlling question.” The SEC highlighted that Coinbase has not proved that there was a “controlling question” in its original filing.
Furthermore, the SEC noted a disjointed argument in Coinbase’s filing, citing the crypto exchange’s claim of focusing on a specific legal question about “contractual obligations.” According to the SEC, Coinbase’s argument about the application of Howey to crypto is an entirely different question altogether.
Despite the SEC countermotion to Coinbase’s request to appeal, the final decision lies with Judge Katherine Polk Failla, who is overseeing the case between both parties. If Failla sides with Coinbase, the crypto exchange will proceed to send the motion to the appeals court.
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