Coinbase vs SEC Update: Can Binance's Ruling Help Coinbase in SEC Battle?
Coinbase Uses Binance Ruling for Appeal!
Coinbase's Chief Legal Officer, Paul Grewal, has raised concerns over divergent court rulings on the sale of cryptocurrencies in the secondary market. Grewal emphasized the need for regulatory clarity, arguing that liability should not depend on the presiding court or judge.
Coinbase Requests Interlocutory Appeal
Coinbase has submitted a notice requesting an interlocutory appeal, citing Judge Jackson’s decision in the Binance BNB case.
Last week, Judge Jackson ruled that Binance’s BNB token sale in the secondary markets does not qualify as a securities transaction. This decision prompted Coinbase to question the disparity in rulings, as different judges have applied regulatory rules inconsistently to major exchanges.
Discrepancy in Judicial Treatment
Paul Grewal highlighted the significant discrepancy in how courts treat crypto transactions. He noted that two district courts have arrived at opposite conclusions on whether economically identical transactions qualify as securities transactions. Grewal criticized the SEC’s litigation-focused approach, which has led to inconsistent rules for market participants. He stressed that liability should not depend on the specific court or judge handling the case.
Background of the Notice
In April 2024, Coinbase requested Judge Failla to pause legal proceedings in the SEC lawsuit. The exchange sought an interlocutory appeal, citing "substantial grounds for differences of opinion" on the applicability of the Howey Test to crypto transactions in the secondary market.
Coinbase referenced Judge Torres's opinion in the Ripple vs. SEC lawsuit, which stated that XRP, when traded in the secondary market, does not satisfy the Howey Test. Coinbase argued that these conflicting opinions from different judges create uncertainty about the actual law.
SEC's Response
In response to Coinbase’s request, the U.S. Securities and Exchange Commission stated that "no court has followed Ripple" in applying the Howey Test to secondary market sales. This further underscores the need for uniform regulatory standards in the cryptocurrency market.
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