SEC appeal in Ripple case strengthens Coinbase’s case, legal expert says

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The SEC’s appeal in the Ripple case only strengthened Coinbase’s position in its ongoing legal battle with the regulator, said James Murphy, a prominent crypto attorney.

Coinbase’s legal team is urging the New York court to grant early approval of their interlocutory appeal filed in April. They point to the SEC’s recent legal move in the Ripple case as evidence of the ambiguity of the Howey test and are looking for the Second Circuit Court of Appeals to step in to resolve the issue.

Coinbase’s lawyers argue that a thorough review of the application of the Howey Test in the ongoing SEC vs. Coinbase Inc. and Coinbase Global would provide much-needed clarity on the classification of digital asset transactions.

“By granting Coinbase’s interlocutory appeal, this court would help ensure that the Second Circuit has before it a full presentation of the legal and practical implications of the SEC’s position in the litigation — a position that the SEC acknowledged just weeks ago ago that it sowed “confusion,” Coinbase’s legal team wrote in an Oct. 4 letter first shared by FOX Business journalist Eleanor Terrett.

Usually, an interlocutory appeal is not allowed before the final judgment. However, Coinbase’s lawyers believe that the SEC’s appeal against Ripple’s court ruling could strengthen their case, and Judge Katherine Polk Failla may reconsider their interlocutory appeal.

On October 2, the SEC formally filed an appeal against Judge Torres’ August 7 ruling that fined Ripple $125 million for improper institutional sales of XRP tokens. In response, Ripple’s chief legal officer, Stuart Alderoty, said the team is considering a cross-appeal to challenge the SEC’s move.

According to Murphy, Judge Katherine Polk Failla’s delay in ruling on Coinbase’s initial interlocutory appeal is “amazing,” given that “those motions are normally ruled on very quickly.”

Last August, the SEC filed an interlocutory appeal challenging a summary judgment by Judge Analisa Torres that certain sales of XRP did not constitute securities under the Howey test. Less than two months after the move, Judge Torres denied the SEC’s request for interlocutory appeal.

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