On Friday, the Securities and Exchange Commission requested that a judge deny Coinbase’s interlocutory appel.
The regulator and the crypto-exchange have been engaged in a court battle since nearly one year. After the agency accused Coinbase as operating an unregistered trade and said that Staking was violating securities law, it charged the exchange with not being registered.
“Interlocutory review is not warranted simply because Coinbase proposes a new legal test and disagrees with the Court’s rejection of that test, nor can it be supported by Coinbase’s desire for quicker appellate review of its invented test,” The SEC stated in its filing.
SEC also argued there is no “substantial ground for difference of opinion,” Because that would indicate there is more to the disagreement than just the apparent difference between the parties. Coinbase is yet to be created, according to the SEC. “substantial doubt” About the Court’s Decision
“It is also possible that Coinbase simply does not like the answer provided for years now by the SEC and the courts, having decided to structure its business in ways that now may make it difficult or costly to comply with the securities framework put in place by Congress and the SEC over our capital markets for nearly a century,” The SEC has written.
“But Coinbase’s desire to change the rules, to do so quickly, and to enlist the federal judiciary in this endeavor, supply no basis to certify an appeal,” The filing continues.
In a blog post, Coinbase’s Chief Legal Officer Paul Grewal reacted to the SEC response. He claimed that the SEC “couldn’t help contradicting its own arguments for the same kind of appeal in Ripple.”
Coinbase had filed an interlocutory appel last month. Coinbase asked a higher court for a review of whether the SEC could apply Howey’s decision to crypto transactions.
The company noted that the amount of differing opinions — from regulators to politicians on Capitol Hill — shows the “difficulty of the subject matter.”
Coinbase and SEC are involved in a number of legal disputes since the last year. The SEC sent Coinbase the Wells notice back in March. Coinbase went back to the courtrooms afterward and demanded answers from the regulator. After that, in June the SEC sued.
In December of last year, the SEC refused Coinbase’s Rulemaking Petition, filed by 2022. The petition requested that SEC create crypto rules and stated that existing securities laws are not suitable for the growing industry. The SEC, notably, had made the opposite claim and it shows through its regulation-by-enforcement approach under Chair Gary Gensler.
In a decision last month, Coinbase was denied in part its motion for dismissal. However, the court found that the SEC’s claims against its wallet service — the SEC alleged that it acted as an unregistered broker by offering the service — were unfounded.
“The factual allegations concerning Wallet are insufficient to support the plausible inference that Coinbase ‘engaged in the business of effecting transactions in securities for the account of others’ through its Wallet application,” Katherine Polk Failla, Judge wrote.
Failla claimed that Coinbase and Staking, a service not registered with the SEC, could continue to be a part of the SEC’s claims. According to Failla, the SEC is responsible. “plausibly alleged” Coinbase is in violation of certain sections of the Security Act.
She said that Coinbase is the reason for her reasoning. “managerial effort” Could meet Howey’s standards which makes it a good security offer.
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