Coinbase has taken a strong stance against the United States Securities and Exchange Commission (SEC) by relying heavily on case law. In its latest move, the cryptocurrency exchange has made a rare conclusion, stating that the SEC is attempting to bypass the Howey test.
On May 24, Coinbase filed a memorandum supporting its interlocutory appeal, which is an appeal against a single ruling in an ongoing case. This filing was in response to the SEC’s opposition to Coinbase’s original request for this appeal. Coinbase initially filed its interlocutory appeal on April 12, disputing a ruling from March 27 that claimed the SEC had sufficient grounds to argue that Coinbase’s staking program was an unregistered securities offering.
Coinbase argued that the main issue in the SEC suit is whether an investment contract requires a contractual undertaking. In its opposition to Coinbase’s appeal, the SEC contended that no court had ever required a post-sale contractual undertaking for the application of the Howey test. However, Coinbase countered in its May 24 filing, stating that this disagreement makes the issue suitable for a court decision rather than a straightforward application of established law. Coinbase also highlighted the inconsistencies between the SEC’s claims in its case against Ripple and those in Coinbase’s case. Additionally, Coinbase pointed out that the House of Representatives recently passed a bill that would limit the SEC’s jurisdiction.
The SEC first filed a lawsuit against Coinbase in June 2023, alleging securities law violations. Apart from the staking program, the SEC also claimed that 13 of the cryptocurrencies listed on Coinbase were securities.
Coinbase has been actively defending itself and the crypto industry. Shortly after the SEC lawsuit was filed, Coinbase launched the Stand With Crypto campaign, which now includes a political action committee.
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