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Coinbase has obtained approval from the judge on its request for a limited appeal against the accusations from the United States Securities and Exchange Commission (SEC). Now the controversy over trading crypto as unregistered securities or not will move to the United States Court of Appeals for the Second Circuit.
Summary
Coinbase vs. SEC: resolving the issue of crypto trading as unregistered securities
Coinbase has obtained approval from a federal judge for its request for a special and limited appeal against the charges from the United States Securities and Exchange Commission (SEC).
Paul Grewal, Chief Legal Officer of Coinbase, commented on the incident 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
The judge Katherine Polk Failla of the United States District Court for the Southern District of New York issued her decision yesterday.
In practice, now, the controversy over crypto trading as unregistered securities or not, will move to the United States Court of Appeals for the Second Circuit. In contrast, the rest of the case between Coinbase and the SEC will remain stalled and inactive.
This is a real acceleration on a potential definitive answer to the question of whether some tokens and crypto should be treated as securities.
In fact, if the outcome of the United States Court of Appeals for the Second Circuit were to affirm that the SEC was wrong with its accusations against Coinbase, this would become an echo for the entire cryptocurrency sector.
Coinbase vs. SEC in interlocutory appeal: the words of the judge
The judge Failla, approving the move of the case to a trial known as an interlocutory appeal, nevertheless disapproved of some statements by Coinbase.
Here’s what he said:
“[I do not appreciate] the company’s efforts to cast shadows on the SEC’s approach to crypto assets”
In any case, Failla also stated that he welcomes Coinbase’s request for April 2024 for the following reasons:
“because it presents a question of law of fundamental importance regarding the scope and application of Howey to crypto-assets, on which there is a substantial reason for divergence of opinions, and whose resolution would anticipate the definitive conclusion of the SEC’s enforcement action”.
With the entry of Donald Trump as the new President of the USA, and the change of guard of the President of the SEC, it might happen that the cards on the table change once again.
The demands for apologies from the next President of the SEC
Last October, the CEO of Coinbase, Brian Armstrong, had stated that the next President of the SEC should apologize to the American people for the damage caused to the crypto world.
At that moment, it was not known that Trump was the new elected President of the USA, and that there would be this new opening in favor of the sector.
In any case, for Armstrong, the apologies from the SEC would be the symbol of a “new beginning” to start the process of restoring trust in the institution.