Coinbase Officially Files Amicus Brief Supporting Ripple, Says SEC Unable To Provide Clear Rules

Coinbase wastes no time filing an amicus brief supporting Ripple following the Judge’s approval.

Coinbase has officially filed its amicus brief in support of Ripple’s fair notice defense, according to a tweet by pro-Ripple lawyer James K. Filan today.

#XRPCommunity #SECGov v. #Ripple #XRP #Coinbase has formally filed its Amicus Brief in Support of Ripple’s Fair Notice Defense.https://t.co/Y4pgXeNsJa

— James K. Filan 🇺🇸🇮🇪 126k (beware of imposters) (@FilanLaw) November 15, 2022

The leading crypto exchange had formally requested to file an amicus brief in support of Ripple 2 weeks ago, taking many in the Ripple community by surprise, as reported by The Crypto Basic.

The firm’s request, along with 11 others, was approved on Monday by Judge Analisa Torres, according to a document shared by FOX Business reporter Eleanor Terrett hours ago. “Accordingly, the requests to file amicus curiae briefs are GRANTED,” the paper read, citing the different requests.

Notably, Judge Torres has given all interested parties till November 18 to make their submission.

Coinbase, citing its interest in the case in its request, had noted its unique perspective as an exchange that had no choice but to delist the XRP token in light of what it described as surprise enforcement from the SEC hurting its customers. In its official brief, it also notes how the uncertainty that comes with the lack of regulatory clarity in the US and the fear of surprise enforcement puts the US exchange at a disadvantage compared to international competitors.

The crypto exchange, setting a premise, highlighted that the 1930s securities act, which the SEC accuses Ripple of breaching, was not made with crypto in mind. Additionally, it noted that the SEC has failed to provide clear rules for the crypto market. Finally, it says the lawsuit surprised and hurt customers that the SEC should protect.

Consequently, it makes three arguments in favor of Ripple’s fair notice defense.

• The law currently prevents surprise enforcement action.
• The SEC has to make a fresh set of rules for the crypto industry as the technology is different, and it can not regulate the space using old rules that do not fit.
• As is the case today, without clear rules, the court should give defendants the right to a fair notice defense.

Coinbase Writes:

“Rather than engaging in rulemaking, the current SEC administration has sought to expand the SEC’s jurisdiction over the cryptocurrency industry through ad hoc enforcement actions alleging on a retrospective basis that already-trading digital assets — previously understood by the market to be commodities regulated by the commodity futures Trading Commission (“CFTC”) or other non-securities –– are actually securities subject to SEC regulation.

The absence of formal rulemaking has led to unexpected enforcement actions that create market uncertainty and profoundly disadvantage U.S. trading platforms like Coinbase as they compete with offshore platforms in jurisdictions with no risk of regulatory enforcement surprise.”

Coinbase further writes:

“Without prior public warning, the SEC in December 2020 filed this action alleging for the first time that XRP was a “security” that Ripple had been selling for years in violation of theSecurities Act. This allegation caused immediate collateral harm to market participants, including to platforms like Coinbase and their retail customers. For example, the SEC’s allegation led multiple U.S. platforms to delist and halt trading in XRP shortly after this lawsuit was filed, resulting in a $15 billion decline in XRP’s market value and significant losses to Coinbase’s customers.”

So far, the Ripple and XRP community has received the development with mixed responses. Some users have celebrated the move as a sign of the industry taking a united front. However, at the same time, some expressed that they are unwilling to forget that Coinbase yielded to pressure and delisted the token before the court reached a verdict, even as others take the opportunity to call on the crypto exchange to relist XRP.

While support for Ripple by various firms and groups has grabbed headlines, it bears mentioning that the SEC has also received support from two firms. InvestReady and the New Sports Economy Institute (NSEI) requested to file briefs in support of the regulator last Thursday. Judge Torres also approved their request on Monday.

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