Coinbase Seeks to Probe Howey Test Clause as SEC Tactics Keep Crypto Community in Suspense

Referencing the SEC's latest appeal, American cryptocurrency exchange Coinbase have requested that the court revisit its motion for interlocutory appeal.

American cryptocurrency exchange Coinbase has filed a letter with the court, requesting that it reconsider its motion for interlocutory appeal, especially in light of the Securities and Exchange Commission (SEC) appeal in Ripple’s case.

The SEC filed a notice of appeal on August 10, officially kicking off the appellate process in the long-running case over whether XRP is a security.

Coinbase Seeks to Probe Howey Test Clause

Coinbase’s latest filing on September 21, is in response to the SEC’s appeal. The crypto exchange wants the court to grant its pending motion to certify interlocutory appeal.

Coinbase first filed this motion for interlocutory appeal in April. At the time, the crypto exchange wanted to review a key question in the case: how the Howey Test, the traditional standard for what counts as a security based on a 1946 Supreme Court ruling, applies to digital assets.

The exchange believes that making this request once again will help provide the Second Circuit with a complete picture to better adjudicate the agency’s position on the Howey Test. It is specifically interested in the application of this test to secondary market crypto transactions.

Attorneys representing Coinbase have argued that the SEC’s appeal in Ripple’s case is an admission that the criteria listed in the SEC’s Howey Test were ambiguous and warranted closer examination. They are also of the opinion that the appeal demonstrates how important the application of the Howey test is. Therefore, the exchange wants its case with the agency looked into.

In April, the agency also filed its motion, requesting that Coinbase’s request be denied. It cited the lack of substantial ground for difference of opinion. Until now, Judge Failla is yet to rule on both requests. While Coinbase may have a stronger argument this time around, there is no guarantee that the court will rule in its favor.

SEC Tactics Keep Crypto Community in Suspense

Though it looks like Ripple is receiving more heat from the SEC, its lawsuit with the agency is setting precedence for other crypto lawsuits. It is not yet clear if the SEC will go home victorious in the end. However, many pro-crypto lawyers think the Commission does not stand a chance.

The SEC named Ripple CEO Brad Garlinghouse and Chris Larsen, a co-founder, as appellees in the appeal filing. This move has gotten many XRP community members talking, with many wondering what the SEC is up to. The days following the appeal hearing will come with a lot of suspense as the ecosystem awaits the verdict.

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