The long-running legal battle between Coinbase and the US Securities and Exchange Commission (SEC) continues to deliver more twists and turns in what may be a pivotal case in the regulatory history of cryptocurrencies. In a recent development, the US cryptocurrency exchange has now filed a response to the Commission's petition against the initial motion for interlocutory appeal in this controversial legal case.
Coinbase sends fiery response to SEC as appeal saga intensifies
On April 12, Coinbase approached the US court seeking clarification on whether it is possible to form an investment contract without after-sales obligations. Cryptocurrency exchanges consider this issue a “controlling legal issue” and it is critical to their ongoing case with the SEC.
In response, the SEC argued that there was no need for the court to certify such an interlocutory appeal because existing securities regulations, particularly the Howey test, had proven sufficient for decades. In particular, the Commission stated that no court had ever required the conclusion of an after-sales contract after the test had been used in the past.
However, in fresh Law note Coinbase filed on Friday, May 24, addressing this statement, saying the interlocutory appeal revolves around the new issue that “no appellate court has addressed whether a digital asset transaction that carries no post-sale obligations can be an ‘investment contract’ under Howey.” “. .
Additionally, the exchange accuses the SEC of avoiding the “overriding issue of law” in its counter-motion by shifting attention to the controversy by applying the Howey test to cryptocurrency transactions instead of Coinbase's petition seeking guidance on applying Howey to digital transactions. Origins.
Coinbase seeks 'elegant' victory in court
Finally, in Coinbase's latest petition, the exchange reiterated the potential importance of this interlocutory appeal over the outcome of its legal case with the SEC. The defendant's attorneys stressed that if a positive outcome is reached, more than 70% of SEC complaints could be invalidated.
The petition statement stated the following:
Most of the 116 document requests recently filed by the SEC and all 32 admission requests, 10 third-party subpoenas, and 9 inspection requests relate to the Coinbase platform and Prime services rather than the unrelated staking program. This heralds a process of discovery, motion practice, and prosecution that leans heavily toward claims centered on “ecosystems” of 12 distinct codes—claims that are destined to consume significant judicial and party resources but, with preliminary review, could be out of control. issue.
On June 6, 2023, the SEC indicted Coinbase for allegedly operating as an unlicensed securities exchange, broker, and clearing agency. Given Coinbase's status as the largest US exchange, the outcome is likely to have massive implications for regulation in the country's booming cryptocurrency industry.
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