Top US crypto exchange Coinbase plans to file a preliminary appeal in its lawsuit with the US Securities and Exchange Commission (SEC) regarding the definition of an ‘investment contract’.
In a new thread, Coinbase Chief Legal Officer Paul Grewal says say that the crypto exchange is filing a preliminary appeal because it and the SEC disagree on the definition of “investment contract.”
“Today, Coinbase filed a brief seeking permission from the Court to seek summary judgment in our SEC case on this controlling question: whether an “investment contract” requires anything contractual – we think so, the SEC is disagree.”
A preliminary appeal occurs when an appellate court is asked to resolve a disagreement crucial to the case that cannot be resolved solely on the facts of the case.
According to court filings, Coinbase argues that trading digital assets does not qualify as an “investment contract” under the Howey Test, an assessment established by the Supreme Court more than 90 years ago to determine whether assets qualify as securities or not.
“[Coinbase] moved to dismiss the SEC’s Exchange Act claims on the grounds that transactions in the tokens the SEC identified were not “investment contracts” and therefore not securities – as a matter of law – under Howey.
Specifically, Coinbase explained that for more than eighty decades, transactions considered “investment contracts” have been based on a contractual commitment that extends beyond the point of sale (hence “contract”) and involves a financial interest in a company (hence ‘effect’). nature of the ‘investment’).”
Coinbase also notes that the SEC allowed it to go public in 2021 with the same company it is now, but reversed course two years later with a lawsuit arguing that the company needed to be registered under the securities laws.
Says Grewal,
“It goes without saying, but I’ll say it anyway: digital assets aren’t going anywhere. And Coinbase will continue to push for clarity for the entire industry and the 52 million Americans who own digital assets. In the meantime, we will continue with business as usual.”
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