SEC Rebukes Coinbase’s Appeal Effort in Crypto Case

The U.S. Securities and Exchange Commission has forcefully pushed back against crypto exchange Coinbase’s efforts to appeal a key question in their high-stakes legal battle.

In a May 10 court filing, the SEC accused Coinbase of trying to “manipulate the question” over what constitutes an investment contract under securities laws.  

The SEC alleges Coinbase is displeased with the long-standing Howey Test used to define securities, claiming the exchange structured its business in a way to avoid compliance with regulations it doesn’t agree with.

“Coinbase just does not like the answer. Having made the weather, Coinbase cannot now complain that it is raining,” the filing states.

Coinbase had argued an investment contract requires a post-sale obligation, which the SEC disputes. The SEC says no court has ever adopted Coinbase’s stance in over 80 years of jurisprudence. It called Coinbase’s attempt to certify an appeal on this “controlling question” unwarranted, accusing the exchange of just hoping to “rewrite settled, decades-old legal precedent.”

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