Coinbase seeks early appeal in SEC case after agency appeals Ripple ruling

In the latest development of a long-running legal saga, Coinbase has asked the judge presiding over its battle with the SEC to grant its request for an interlocutory appeal, or an appeal granted before the resolution of a case, in light of the agency's recent appeal of its separate case against web3 payments firm Ripple. 

Coinbase's original request for an interlocutory appeal was filed back in early April, and requested that the Second Circuit of Appeals be allowed to review a key question in the case: how the Howey Test, the traditional standard for what counts as a security based on a 1946 Supreme Court ruling, applies to digital assets. "That Members of Congress, Senators, and regulatory agencies have divided in answering [the question] bespeaks the difficulty of the subject matter, and the divergent judicial outcomes illustrate the point," Coinbase's lawyers wrote. 

Though the SEC filed its own letter one month later requesting that the appeal be denied, as the agency felt there was "no substantial ground for difference of opinion," Judge Katherine Polk Failla of New York has yet to rule on the appeal request. 

Now, Coinbase is once again urging Judge Failla to consider its interlocutory appeal motion following the SEC's recent appeal in its case against Ripple. The crypto exchange argues that presenting both cases to the Second Circuit at a similar time would help grant that court "...a full account of the legal and practical implications of the SEC’s litigating position," the letter states. 

"Coinbase remains confident that we are right on the facts and the law. Given the SEC’s recent appeal in the Ripple case, allowing the Second Circuit to have as complete a picture as possible will be important as it considers how Howey applies to secondary market transactions. We appreciate the Court's careful consideration," a Coinbase spokesperson told The Block. 

"The SEC has conceded, and now reconfirms by its appeal in Ripple, that the issues presented by Howey’s application to secondary-market digital asset transactions are of 'industry-wide significance,'" Coinbase's lawyers wrote. "Prompt and complete appellate review is urgently needed." The SEC was not immediately available for comment. 

While interlocutory appeals are rarely granted, the SEC's appeal in the Ripple case strengthens Coinbase's argument, according to cryptocurrency-focused attorney James "MetaLawMan" Murphy, who called the filing a "smart move". "It is astounding that Judge Failla never ruled on Coinbase’s original motion for interlocutory appeal filed back in April. Those motions are normally ruled on very quickly," Murphy wrote on X.