Coinbase, a prominent exchange, has filed for an interlocutory appeal in its enforcement case against U.S. Securities and Exchange Commission (SEC) citing a recent decision by Judge Jackson against SEC in the Binance BNB case.
Last week, Judge Jackson ruled in the SEC versus Binance Holdings Limited case that Binance’s BNB token sales in secondary markets do not meet the definition of securities. The decision by Judge Jackson is in contrast with previous rulings and has prompted Coinbase to question the varying treatment of exchanges under regulatory rules by different judges.
Paul Grewal, Coinbase’s Chief Legal Officer, took to ‘X’ and pointed out a significant gap in how U.S. district courts interpret crypto transactions. He highlighted cases involving major exchanges where courts reached opposite conclusions on whether similar transactions qualify as securities.
Grewal criticized the SEC’s litigation-focused approach to crypto regulation, arguing it creates inconsistent rules across jurisdictions and emphasizing the need for uniform legal standards where liability should not vary by court or judge.
Earlier this year, in April 2024, Coinbase requested Judge Failla to halt its SEC lawsuit proceedings and sought an interlocutory appeal. They cited substantial differences in opinions regarding whether the Howey Test should apply to crypto transactions in secondary markets.
Coinbase referenced Judge Torres’s opinion in the Ripple vs. SEC case, where it was determined that XRP sales in secondary markets do not satisfy the Howey Test. This conflicting judicial stance, according to Coinbase, creates uncertainty about the legal framework governing cryptocurrencies.
In response to Coinbase’s motion, the U.S. Securities and Exchange Commission stated that no court has adopted Ripple’s interpretation of applying the Howey Test to secondary market sales.
Also Read: US Judge Refuses to Dismiss Claims against Binance
