On July 2, the U.S. District Court for the District of Connecticut granted a motion to certify for interlocutory appeal its February 24 ruling that the plaintiffs adequately alleged that an interest-bearing crypto yield program constituted a security under federal securities laws. In their motion, the defendants argued that whether interest-bearing cryptocurrency accounts qualify as securities was a controlling and case-dispositive question suitable for immediate appellate review. The court agreed, holding that the defendants had identified a controlling question of law because, if the 2nd Circuit were to reverse on whether the program was a security, the plaintiffs would have no remaining federal causes of action. The court also found substantial ground for difference of opinion on the legal question, noting that the 2nd Circuit has not provided guidance on how the U.S. Supreme Court’s test for investment contracts under Howey and its test for notes under Reves apply to cryptocurrency investment activities, and that cryptocurrency investment activities like the program “fit awkwardly” within the Howey framework. The court concluded that immediate appeal could materially advance the litigation by potentially narrowing or ending the federal claims.

In a separate July 2 order, the court granted the plaintiffs’ motion to revise the February 24 ruling after concluding that the Class Action Fairness Act supplied original jurisdiction over the state law claims the court had previously declined to hear. The court reinstated those claims; stayed claims under California, Florida and New York law pending further order because their validity depends on whether the February 24 ruling withstands interlocutory appeal; granted dismissal of claims under Illinois, Kansas, Nevada and Texas law; and denied dismissal of the common law fraud claim.