In The Ripple Lawsuit, Coinbase Sends An Amicus Brief
In order to submit a brief in the Ripple case, Coinbase requested authorization to do so. In the brief, Coinbase claims that the SEC has not adequately regulated the cryptocurrency market.
Bitcoin exchange In its request for authorization to submit a brief in the current dispute between the Securities and Exchange Commission and Ripple Labs, Coinbase claimed that U.S. exchanges are at a disadvantage due to the lack of clarity in enforcement proceedings involving cryptocurrencies.
In its brief, Coinbase contends that the Constitution mandates that authorities to provide “fair notice” that a certain course of behaviour is unlawful before acting. In other words, before the SEC may pursue an action, the public must have a method to know the behaviour is unlawful.
If the exchange’s application to submit an amicus curiae brief is granted, the court will consider the material in the brief while making its conclusion. In a recent motion for summary judgement, both Ripple and the regulator asked the court to rule on the matter based on the agreed-upon facts rather than scheduling a trial.
As the SEC has failed to offer clear regulation for a rapidly expanding business, the Coinbase amicus brief joins previous initiatives from the cryptocurrency sector to provide context for the case, such as a recent motion by The Blockchain Association. Coinbase petitioned the regulator in July, requesting that the SEC create specific rules for cryptocurrencies.
In 2020, the SEC filed a lawsuit on the grounds that Ripple’s XRP coin was an unregistered securities offering. The brief backs up an argument made by Ripple in its defence that the SEC failed to provide sufficient notice that the issuance and trade of XRP constituted unlawful behaviour.
According to Coinbase, the SEC sued vendors of the XRP coin after allowing XRP to trade for several years. The exchange claims that the regulator publicly declared that established tokens were not securities. Coinbase requests that the court reject the SEC’s move for summary judgement on the basis that the absence of regulations and the purportedly confusing signals did not provide enough notice.
The company also claims that individuals attempting to comply suffer considerable losses as a result of the SEC’s ambiguity. Many platforms stopped XRP trading after the SEC launched its claims against Ripple’s XRP coin, which caused the price to fall and hurt Coinbase clients.
“The absence of formal rulemaking has led to unexpected enforcement actions like this one that create market uncertainty and profoundly disadvantage U.S. trading platforms like Coinbase as they compete with offshore platforms in jurisdictions where there is no risk of regulatory enforcement surprise,” the brief said.
