The federal judge overseeing the SEC’s lawsuit against Coinbase ruled Tuesday that the case must be paused until an appeals court can weigh in. US District Judge Katherine Failla agreed with Coinbase’s argument that too many courts across the country are coming to different conclusions about the legality of crypto, which should be acknowledged as a novel legal issue. 

The ruling is unquestionably a blow to the SEC, which has argued for years under the Biden Administration that the sale of most crypto assets is plainly illegal under existing securities laws. 

In her decision today, Judge Failla squarely dismissed that position, finding the question of how securities laws apply to crypto to be an “issue of first impression,” meaning one that has never been decided before and that courts must weigh for the first time. 

Because the legality of crypto is such a novel and complicated legal issue, Failla wrote, it is understandable why courts across the country are coming to different conclusions about the technology—a state of affairs that should not continue. 

“Conflicting authority exists regarding Howey

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Author: Sander Lutz