Coinbase, the leading cryptocurrency exchange in the US, is seeking to file an interlocutory appeal in its ongoing lawsuit with the US Securities and Exchange Commission (SEC) over the definition of an “investment contract.” In a recent statement, Coinbase’s chief legal officer, Paul Grewal, explained that the exchange is requesting permission from the court to seek this appeal because of the disagreement between Coinbase and the SEC regarding the definition of an investment contract.
An interlocutory appeal is when an appellate court is asked to address a crucial disagreement in a case that cannot be resolved based solely on the facts. Coinbase argues in its court filings that trading digital assets should not be considered an investment contract under the Howey Test, which was established by the Supreme Court over 90 years ago to determine the classification of assets as securities.
Coinbase further explains that an investment contract, according to its interpretation, requires a contractual element beyond the point of sale, involving a financial stake in a business. The SEC, however, disagrees with this interpretation.
Coinbase also highlights that the SEC allowed the exchange to go public in 2021 without requiring registration under securities laws. However, two years later, the SEC filed a lawsuit against Coinbase, claiming that the company should have been registered.
Grewal emphasizes that digital assets are here to stay and that Coinbase will continue to advocate for regulatory clarity for both the industry and the millions of Americans who own digital assets. In the meantime, Coinbase will continue to operate as usual.
In conclusion, Coinbase is seeking an interlocutory appeal to address the disagreement with the SEC over the definition of an investment contract. The exchange argues that digital asset trading should not be classified as such, while the SEC holds a different view. Coinbase remains committed to advocating for clarity in the industry and serving its customers.
