Coinbase Secures Partial Win As Judge Approves Appeal In SEC Lawsuit

Cryptocurrency exchange Coinbase achieved a small victory in its legal battle with the US Securities and Exchange Commission (SEC) as a federal judge approved an interlocutory appeal.

The decision provides Coinbase an opportunity to challenge key legal interpretations that underpin the SEC’s case against the platform.

On 7 January 2025, US District Judge Katherine Failla granted the appeal and ordered all proceedings to be paused until the Second Circuit Court rules on the matter. The appeal challenges her March 2024 order denying Coinbase’s motion for judgment.

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Judge Notes Conflicting Views On SEC’s Crypto Asset Classification

Judge Failla cited the potential for conflicting interpretations regarding the SEC’s claims that certain crypto-asset transactions qualify as investment contracts under the Howey test. The test determines whether certain transactions fall under securities law.

The decision stems from conflicting rulings in other high-profile SEC cases, such as those against Terraform Labs and Ripple Labs. In the Ripple case, the court ruled that XRP was not a security in programmatic sales on crypto exchanges.

These differing interpretations prompted Judge Failla to emphasize the need for the Second Circuit’s guidance on the matter.

The SEC originally filed its case against Coinbase in June 2023, accusing the exchange of operating as an unregistered securities exchange, broker, and clearing agency since 2019.

The crypto industry has criticized the SEC under Chair Gary Gensler for its aggressive enforcement actions, claiming overreach in its regulatory approach.

Coinbase’s Chief Legal Officer, Paul Grewal, welcomed the court’s decision, noting the importance of clarifying regulatory uncertainty. “We appreciate the Court’s careful consideration. On to the Second Circuit we go,” he wrote on X.

Over the strenuous objection of @SECGov, Judge Failla has GRANTED our motion for leave to pursue an interlocutory appeal and STAYED the district court litigation. We appreciate the Court’s careful consideration. On to the Second Circuit we go. pic.twitter.com/FuZ2jcYvfF

— paulgrewal.eth (@iampaulgrewal) January 7, 2025

In addition to defending itself against the SEC’s lawsuit, Coinbase has backed efforts to uncover alleged government attempts to debank crypto firms, known as “Operation Chokepoint 2.0.”

Coinbase has also been active in political advocacy, contributing alongside Ripple more than $90 million to the Fairshake political action committee in the 2024 elections.

The committee supported pro-crypto candidates in congressional races. Following Republican Donald Trump’s presidential victory, Grewal called for the SEC to adjust its approach to digital asset regulation.

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SEC Faces Leadership Change

The SEC faces leadership changes as Gensler announced plans to step down on January 20, and Commissioner Jaime Lizárraga is also set to leave before Trump’s inauguration.

Meanwhile, Donald Trump has selected Paul Atkins, a crypto advocate and former SEC commissioner, as his choice to lead the SEC.

He has also appointed David Sachs, a podcaster, as the “Crypto Czar” in his cabinet. He also pledged to make America the “crypto capital of the world” through initiatives like World Liberty’s lending and borrowing platform.

As reported, the SEC has taken a tougher stance against crypto firms in 2024. More specifically, the regulator imposed nearly $4.7 billion in enforcement actions against crypto companies, a 3,018% increase from 2023.

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The post Coinbase Secures Partial Win As Judge Approves Appeal In SEC Lawsuit appeared first on 99Bitcoins.