Coinbase has alleged that the SEC is attempting to circumvent the Howey test by avoiding the question of whether digital asset transactions lacking post-sale obligations can be deemed investment contracts. The exchange filed a motion for an interlocutory appeal with the US District Court for the Southern District of New York on May 24, challenging a recent court order pivotal to its ongoing case with the SEC.

The motion focuses on whether digital asset transactions without post-sale obligations can meet the criteria of "investment contracts" under the Howey test, a legal standard used to classify securities. Coinbase contends that no appellate court has previously addressed this specific issue in the 78 years since the Howey decision.

In its argument, Coinbase emphasizes the significance of resolving this unresolved legal question for the digital asset industry and asserts that immediate appellate review is necessary. The exchange points out that historically, no appellate court has found an investment contract without a post-sale contractual obligation, a point it believes the SEC overlooks.

The SEC opposes Coinbase's motion, arguing that the court's order does not involve a controlling question of law and that there is no substantial basis for a difference of opinion. Despite this, Coinbase argues that the court's decision conflicts with established precedents, including recent rulings in the SEC v. Ripple Labs, Inc. case, which concluded that certain digital asset transactions did not meet the Howey criteria.

Coinbase suggests that a successful appeal could potentially dismiss significant portions of the SEC's case against it, particularly those related to its platform and Prime services, which constitute a substantial majority of the complaint. Resolving the foundational legal issue through an appeal could streamline the litigation process and reduce resource expenditures.

The outcome of this case is expected to have far-reaching implications for the SEC's oversight of digital asset transactions amid increasing regulatory scrutiny. Coinbase seeks to expedite appellate review to provide clarity and guidance crucial for the industry.