The Securities and Exchange Commission (SEC) of the United States has rejected cryptocurrency exchange Coinbase’s request for an interlocutory appeal in an ongoing lawsuit. The SEC claims that Coinbase is attempting to manipulate the interpretation of a “controlling question” in order to appeal it under a specific law. The SEC filed a document on May 10 with the U.S. District Court for the Southern District of New York, stating that Coinbase’s attempts are self-defeating. The SEC further argues that Coinbase does not agree with the SEC’s Howey test, which determines what qualifies as a security, and has structured its business in ways that make it difficult to comply with existing regulations. Coinbase had filed an interlocutory appeal on April 12, arguing that an investment contract cannot exist without a post-sale obligation. However, the SEC disagrees and claims that Coinbase is unable to provide a clear explanation of what constitutes a “contractual undertaking.” The SEC highlights that no court has ever required “contractual undertakings” after a sale in the past 80 years. The SEC states that interlocutory review is not warranted simply because Coinbase proposes a new legal test and disagrees with the court’s rejection of it. The SEC sued Coinbase in June 2023, accusing the exchange of violating federal securities laws by listing 13 tokens it claims are securities. Coinbase argues that the transactions on its platform should not be considered securities and fall outside of SEC regulations, while the SEC holds the opposite view.
Coinbase's response not satisfactory, claims SEC