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Popular pro-XRP legal expert Jeremy Hogan reacts to the recent development in the SEC v. Coinbase lawsuit, where a federal judge granted the exchange’s interlocutory appeal request.
In a startling development, District Judge Katherine Polk Failla granted Coinbase the request to pursue an interlocutory appeal in its lawsuit against the SEC. The judge paused the remaining part of the case until the Second Circuit addressed the interlocutory appeal.
As usual, Coinbase Chief Legal Officer Paul Grewal called the public’s attention to the development in an X post yesterday. Grewal expressed gratitude to the court for granting the exchange’s motion for leave to pursue an interlocutory appeal.
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
Coinbase Latest Decision
Notably, the interlocutory appeal revolves around whether an investment contract requires an actual contract. The judge suggested that this issue presents “a controlling question of law” regarding how the Howey Test, a longstanding security test in the United States, is applied to crypto assets.
Even though the judge criticized Coinbase for discrediting the SEC’s regulatory approach to crypto assets, she still granted its interlocutory appeal request, filed in April 2024.
The judge referenced conflicting rulings from other federal courts on this issue, emphasizing the need for guidance from a higher court like the Second Circuit Court of Appeals.
Attorney Hogan Reacts
Commenting on the development, Attorney Hogan characterized the decision as “big news in the legal crypto space.” According to him, the issue of whether an investment contract requires an actual contract is also a bone of contention in the Ripple appeal. This case is expected to commence fully later this month.
Hogan asserted that it is rare for a district judge to grant an interlocutory appeal request. He pointed out that the decision reflects the judge’s belief that ‘there is something there.’
This suggests that the judge believes the issue of whether an investment contract requires an actual contract warrants an immediate review from a higher court.
Recall that a federal judge denied the SEC’s request for an interlocutory appeal in the Ripple lawsuit in October.
Next Steps in Coinbase Lawsuit
Following Judge Failla’s decision, Coinbase will file a notice of appeal with the Second Circuit. If the Second Circuit agrees to hear the appeal, Coinbase will submit its appeal brief, arguing why the SEC’s claims of violating federal securities laws are incorrect.
The SEC will also file its opposition, and the Second Circuit will issue its decision. Afterward, Judge Katherine will resume the lawsuit at the district level.
Meanwhile, the upcoming changes at the SEC could significantly impact the outcome of the lawsuit. It is noteworthy that pro-crypto advocate Paul Atkins will replace crypto skeptic Gary Gensler as the next SEC chair.
Consequently, both parties could agree on a settlement to resolve the lawsuit, ending the legal tussle that began in June 2023.