Coinbase Seeks to Take Core Question in U.S. SEC Case to Higher Court
The regulator has argued before lawmakers and courts that the vast majority of digital assets are securities, but others from the industry contend that once the asset hits secondary markets and is no longer connected to the business that issued it, the token is beyond the SEC's legal reach
Investment contracts are securities regulated by the SEC, so if a crypto transaction qualifies, it belongs in the agency's jurisdiction and should be properly registered under the law. The regulator has argued before lawmakers and courts that the vast majority of digital assets are securities, but Coinbase and others from the industry contend that once the asset hits secondary markets and is no longer connected to the business that issued it, the token is beyond the SEC's legal reach. Answering this dispute would be fundamental for the U.S. crypto sector.
Judge Katherine Polk Failla, of the U.S. District Court for the Southern District of New York, ruled last month that the SEC had demonstrated enough of its legal premise in its accusations against Coinbase that the court would move forward with most of the case. Coinbase's new appeal of one piece of that decision would have to be accepted by Judge Failla and the Second Circuit in order to move forward. If they take it up, the rest of the case stays in place in Failla's court as the regulator and the company move toward trial.
Coinbase's case is considered one of the decisive legal battles that could determine the course of the industry in the U.S. So far, the SEC has had a mixed record of some big losses (such as against Ripple) and some significant gains (such as in its case against Terraform Labs and in an insider-trading case connected to Coinbase).
