Airdrop Army

Coinbase just turned up the heat in its legal clash with the SEC, and it’s all because of Ripple. Attorneys for the exchange sent a letter to the Southern District of New York on October 5, telling the court that the SEC’s recent appeal in the Ripple case proves that the Howey Test is far from settled law. They want the court to rethink an appeal they filed in April, and they’re not holding back.

Coinbase’s legal team argued that the SEC’s Ripple appeal is a big deal because it exposes holes in the agency’s logic. The Howey Test, which the SEC uses to determine if something’s a security, is looking pretty shaky. So, according to Coinbase, this demands more scrutiny. The exchange’s lawyers insist the Howey Test doesn’t really fit in the modern digital world, and they’re calling for a deeper review of its application to crypto.

Howey Test Is on Shaky Ground

The SEC’s Ripple appeal basically signals that the agency itself knows there’s confusion over what makes a security. Coinbase’s attorneys pounced on this, writing, “The SEC has conceded, and now reconfirms by its appeal in Ripple, that the issues presented by Howey’s application to secondary-market digital asset transactions are of ‘industry-wide significance.’”

Coinbase believes the SEC’s move in the Ripple case is a confession of sorts, admitting the test needs a second look. And because so much hangs on this—entire token ecosystems, exchanges, and projects—it’s no small matter. They’re saying this is no longer just about Coinbase or Ripple; this could shake the whole industry.

Coinbase Goes After the CFTC, Too

But wait, there’s more. Coinbase isn’t just focused on the SEC. In October 2024, the exchange also filed a motion to force the Commodities Futures Trading Commission (CFTC) to hand over some key communications. Why? Because those docs might hold the clues to which digital assets are considered securities. Coinbase hopes this info could tip the scales in its favor.

All this comes as the SEC itself is delaying deadlines, requesting more time to gather documents related to Coinbase’s case. While the court gave the SEC until February 2025, this ongoing delay only strengthens Coinbase’s argument that there’s more uncertainty here than the SEC wants to admit.