With mere seconds left on the clock, Gary Gensler’s US Securities and Exchange Commission (SEC) has just suffered another loss in its pursuit to regulate the crypto industry through its ‘regulation by enforcement’ approach.
To the cheer of the Chief Legal Officer at Coinbase, Paul Grewal, the company has secured a partial win in the lawsuit against the SEC.
Over the strenuous objection of @SECGov, Judge Failla has GRANTED our motion for leave to pursue an interlocutory appeal and STAYED the district court litigation. We appreciate the Court's careful consideration. On to the Second Circuit we go. pic.twitter.com/FuZ2jcYvfF
— paulgrewal.eth (@iampaulgrewal) January 7, 2025
In the ruling from January 7, Katherine Polk Failla, a District Judge at the United States District Court for the Southern District of New York, granted Coinbase the right to appeal the SEC’s securities violation claims to a higher court, while their main case is temporarily paused.
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In legal terms, Judge Failla granted a so-called interlocutory appeal. Simply put, this is a specific legal tool that allows parties to challenge a court’s decision in the middle of an ongoing case, rather than waiting until the entire case is finished.
As a result of the appeal, the court proceedings in the SEC vs. Coinbase lawsuit will be paused. The case will not proceed until the Second Circuit Court of Appeals makes a decision regarding the necessity of an actual contract for something to be considered an investment contract under securities law.
Industry Reacts to Coinbase Decision
Apart from Grewal, who had every reason to be happy, other community members chimed in to comment.
Popular lawyer Jeremy Hogan weighed in as one of the first. Many may remember him from the lengthy saga that is the case SEC against Ripple, where the watchdog alleged, largely unsuccessfully, that XRP is a security,
Hogan said that the development is “big news”, not just for the specific cases of Coinbase and Ripple, but for the legal landscape of the cryptocurrency industry as a whole. The decisions made in these cases could have far-reaching effects on how cryptocurrencies are regulated in the future, according to the attorney.
Fellow lawyer MetaLawMan said the news is a sign that Coinbase will be able to succeed because “crypto tokens traded on the Coinbase platform are not securities”.
Disclaimer
This article is provided for information only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
