Cryptocurrency exchange Coinbase has announced its decision to file a temporary appeal in its ongoing case with the US Securities and Exchange Commission (SEC). The appeal will question the SEC's authority to classify digital asset transactions as investment contracts.
If the appeal is granted, the original hearing proceedings will be suspended pending a decision by the Second Circuit Court.
Paul Grewal, Coinbase's Chief Legal Officer, explained the company's stance in a recent statement. “Today, Coinbase filed a brief asking the Court for permission to file an interlocutory appeal in our SEC case on this fundamental question: whether an 'investment agreement' requires something contractual, which we think it does, but the SEC disagrees,” Grewal said. said.
Grewal noted that this appeal is important for the digital asset industry. He argued that the SEC's actions against Coinbase and other digital asset companies exceeded the statutory authority granted by Congress and cast an unfair shadow over U.S. digital asset innovation.
Interestingly, Coinbase is not alone in its belief that the question of when a crypto transaction may be an 'investment contract' requires interim appeal. The SEC itself put forward the same arguments in the Ripple case, noting the 'industry-wide importance' of the issue presented.
Grewal concluded his statement by supporting the future of digital assets: “It goes without saying, but I'll say it anyway: digital assets aren't going anywhere. Coinbase will continue to provide clarity for the entire industry and the 52 million Americans who own digital assets. In the meantime, we'll continue business as usual.” “
In a ruling last month, New York Judge Katherine Polk Failla rejected Coinbase's claim that investment agreements require a formal contract. He argued that when a customer buys a token through Coinbase, they are not just buying a token, they are also buying that “token's digital ecosystem.”
Next steps in the case will include discovery, summary judgment and potentially a trial to a jury. However, these operations are unlikely to begin until 2025. Both the SEC and Coinbase are required to submit a proposed case management plan before April 19.
*This is not investment advice.
