Cryptocurrency exchange Coinbase has filed a request with a U.S. court to examine a specific “controlling question” posed by the Securities and Exchange Commission (SEC) in their ongoing lawsuit against the exchange.
In a filing with the U.S. District Court for the Southern District of New York on April 12, Coinbase argued that the question at hand is not burdened by factual disputes and is ready for immediate review.
According to Coinbase’s chief legal officer Paul Grewal, the “controlling question” revolves around whether an investment contract necessitates something contractual. The exchange asserts that the existence of an “investment contract” without any post-sale obligations is purely a question of law.
Grewal further explained that Coinbase believes an investment contract requires contractual obligations after the sale, while the SEC argues otherwise.
This request from Coinbase comes after U.S. District Judge Katherine Failla rejected the exchange’s motion to dismiss the SEC’s case, which accuses Coinbase of operating as an unregistered exchange, broker, and clearing agency.
However, if the court approves the interlocutory appeal, it could have a significant impact on the case, which has been ongoing since June 2023. The SEC claims that Coinbase’s crypto transactions constitute investment contracts, even without any alleged contractual obligations.
Grewal emphasized the early filing of Coinbase’s appeal request, just 17 days after the motion to dismiss was denied. He justified this action by highlighting its importance for the broader crypto industry and the desire to resolve the dispute over crypto transactions as quickly as possible.
Coinbase recently achieved a major victory in a civil lawsuit where plaintiffs accused the exchange of offering and selling them unregistered securities. The United States Court of Appeals for the Second Circuit ruled in favor of Coinbase, confirming that secondary sales of cryptocurrencies on its platform do not violate the Securities Exchange Act.