District Judge Katherine Polk Failla of the United States District Court Southern District of New York granted a Coinbase motion for an interlocutory appeal in their lawsuit against the US Securities and Exchange Commission (SEC) in a Jan. 7 ruling.
Judge Failla claimed that the parties seek clarity on an “important legal issue,” although they “tussle” over which court has the proper tools to clarify.
As a result, Coinbase can now appeal the SEC accusations to the Second Circuit of the US Court of Appeals. Court proceedings will remain halted until a decision comes out on whether an investment contract requires an actual contract.
An interlocutory appeal is a legal procedure allowing a party to appeal a trial court’s ruling while the case is ongoing.
The SEC filed a lawsuit against Coinbase on June 6, 2023, accusing the company of offering unregistered securities through its crypto offerings and staking program.
Community rejoices
Paul Grewal, chief legal officer of Coinbase, cheered the court win on X. He also explained the development in sports terms:
“The referee just stopped the clock on the field and is going to the replay booth in New York…”
Jake Chervinsky, chief legal officer of Variant Fund, described the news as “huge.” He added that the Second Circuit’s decision will clarify whether digital asset transactions in secondary markets are subject to securities laws.
Jeremy Hogan, a lawyer and partner at Hogan & Hogan, highlighted that interlocutory appeals are rare and indicate that the trial-level judge thinks something should be checked.
Additionally, Hogan said that Coinbase’s appeal is driven by the same central point of contention in the Ripple appeal in their legal battle against the SEC.
Marco Santori, Kraken’s chief legal officer, congratulated Coinbase’s legal team and called the development a “big win for the whole ecosystem.”
Amanda Tuminelli, chief legal officer at DeFi Education Fund, called the decision to stay the lawsuit while Coinbase appeals in the Second Circuit important.
She also highlighted that Judge Failla considered the Blockchain Association’s amicus brief, which argued that distinguishing the offer and sale of crypto from that of commodities and collectibles could expand the SEC’s regulatory reach.
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