Cryptocurrency exchange Coinbase has requested a United States court to examine a specific “central question” raised by the U.S. Securities and Exchange Commission (SEC) in its ongoing lawsuit against the exchange.
Coinbase argued in an April 12 filing with the U.S. District Court for the Southern District of New York that “the issue at hand is clear of factual disputes and thus ready for immediate review.”
Coinbase’s chief legal officer, Paul Grewal, clarified in a post on X dated April 12 that the “central question” revolves around whether an investment contract necessitates “something contractual.”
“The question of whether an ‘investment contract’ can exist without any post-sale obligations is a fundamental, pivotal legal matter,” the exchange asserted in the court filing.
Grewal further explained that while Coinbase believes an investment contract mandates contractual obligations following the sale, the SEC contends otherwise.
Following U.S. District Judge Katherine Failla’s decision to reject Coinbase’s motion to dismiss, the SEC’s lawsuit against the exchange continues. The lawsuit accuses Coinbase of functioning as an unregistered exchange, broker, and clearing agency.
If the court grants permission for the interlocutory appeal, it could wield considerable influence over the case, which has been in progress since June 2023.
This stems from the SEC’s assertion that Coinbase crypto transactions constituted investment contracts “even in the absence of any purported contractual obligations,” as Coinbase stated.
“A reversal on the issue at hand would essentially dismiss the SEC’s primary assertions, which constitute the majority of the factual allegations in the complaint.”
Moreover, it argues that a legal question holds sway if its resolution could “substantially impact the course of the proceedings.”
Coinbase Appeals SEC Decision Swiftly
Moreover, Grewal emphasized Coinbase’s swift filing of its appeal, which came just 17 days after the motion to dismiss was denied.
Despite the accelerated timeline, he defended the move, citing its crucial importance for the broader cryptocurrency industry and the urgency in resolving the dispute over crypto transactions.
“We’re seeking an expedited appeal process because it holds paramount significance for our industry. The SEC’s actions against us and fellow digital asset firms exceed the bounds of congressional authority, casting an unwarranted shadow over U.S. digital asset innovation.”
This development follows Coinbase’s significant legal triumph in a civil lawsuit where plaintiffs alleged the exchange sold them unregistered securities.
On April 6, Cointelegraph reported that the United States Court of Appeals for the Second Circuit ruled in favor of Coinbase, affirming that secondary cryptocurrency sales on its platform do not breach the Securities Exchange Act.
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