Coinbase has leaned heavily into case law in its latest volley against the United States Securities and Exchange Commission and has come to a rare conclusion: “The SEC seeks to side-step the [Howey] test.”

Coinbase filed a memorandum in support of its interlocutory appeal — an appeal against a single ruling in an ongoing case — on May 24. The document is a response to the SEC’s opposition to its original request for such an appeal. Coinbase filed its interlocutory appeal on April 12 disputing a March 27 ruling that the SEC had shown sufficient grounds to claim the cryptocurrency exchange’s staking program was an unregistered securities offering.

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Coinbase claimed that the controlling question (essentially the main issue at stake and a necessary element in an interlocutory appeal) in the SEC suit is whether an investment contract requires a contractual undertaking. In its memorandum opposing the original Coinbase interlocutory appeal, the SEC argued that no court had demanded a post-sale contractual undertaking for the application of Howey. In its May 24 filing, Coinbase countered:

“The SEC ignores that no appellate court in the 78 years since [the Supreme Court ruling that established the] Howey [test] has found an investment contract absent a post-sale contractual undertaking.”

That, in turn, makes the issue ripe for a court decision and not “the inevitable application of settled law,” Coinbase said. It also found the SEC’s claims in its suit against Ripple to be inconsistent with those in Coinbase’s case and noted that the House of Representatives just days earlier passed a bill “that would deny the SEC the expansive jurisdiction it claims.”

The SEC filed suit against Coinbase in June 2023 alleging violations of securities law. Besides its claims about the staking program, the SEC said 13 of the cryptocurrencies it lists were securities.

Coinbase has been quite proactive in its self-defense and the defense of the crypto industry. In June, days after the SEC suit was filed, it launched the Stand With Crypto campaign, which now includes a political action committee.

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