U.S.-based cryptocurrency exchange giant Coinbase has secured a major legal win in its longstanding battle with the Securities and Exchange Commission.
The exchange has been allowed to pursue an interlocutory appeal while pausing district court litigation.
"We appreciate the Court's careful consideration. On to the Second Circuit we go," Paul Grewal, chief legal officer at Coinbase, said on social media while commenting on the ruling.
U.S. District Judge Katharine Polk Failla greenlit the interlocutory appeal since it "presents a controlling question of law" when it comes to the reach and application of the Howey test to cryptocurrencies. The judge has noted that there is "substantial ground" for difference of opinion.
The ruling says that this important legal issue necessitates the guidance of the Court of Appeals for the Second Circuit.
Tomiwabold OlajideAccording to Judge Failla, an immediate interlocutory appeal would "materially advance" the termination of the litigation because a substantial portion of the SEC’s claims against Coinbase might end up being dismissed.
As noted by Jeremy Hogan, partner at Hogan & Hogan, the granting of such an interlocutory appeal is "rare."
The litigation proceedings will be paused until the appellate court rules on whether or not an "investment contract" requires an actual contract, according to Hogan.
Hogan has also added that this is the main point of contention in the Ripple appeal.
"Huge congratulations to the Coinbase Legal Team. Not only will the Second Circuit consider dismissing the SEC's case, but the trial court will pause it in the meantime. Big win for the whole ecosystem," Marco Santori, chief legal officer at Kraken, said on social media.
Despite the legal win, the stock of Coinbase (COIN) is down more than 8% amid a severe crypto market crash.
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