Cryptocurrency exchange Coinbase has filed an amicus brief in support of Ripple Labs in the U.S. Securities and Exchange Commission (SEC) lawsuit over xrp. Coinbase’s support is seen as a significant step in the case given that the crypto exchange was among the first trading platforms to delist xrp following the SEC lawsuit.
Coinbase Supports Ripple Against SEC
The Nasdaq-listed cryptocurrency exchange Coinbase filed an amicus brief on Tuesday in support of Ripple Labs against the U.S. Securities and Exchange Commission (SEC). The regulator sued Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen over the sale of XRP, alleging that the crypto token is a security.
Since the SEC lawsuit was filed, “multiple U.S. exchanges delisted XRP, causing its market value to decline by $15 billion, resulting in significant losses to Coinbase’s customers,” the counsel for Coinbase explained in the filing, noting:
In the absence of a regulatory framework governing digital assets, Coinbase believes that parties like Ripple must be permitted to pursue fair notice defenses in matters where they are facing surprise enforcement actions like this one.
In its amicus brief, Coinbase argued that “existing due process precedents prohibit unforeseen enforcement actions” and “SEC rulemaking is essential to account for new technology in the crypto space.” In addition, “a robust fair notice defense is critical in the absence of crypto rulemaking.”
“Until the SEC engages in rulemaking for cryptocurrency, the fair notice defense is a constitutionally required brace against arbitrary, surprise cryptocurrency enforcement actions,” Coinbase asserted. “In the absence of such regulations … preventing Ripple’s fair notice defense from even being heard at trial will not only undermine Ripple’s ability to avail itself of a defense afforded by the basic tenets of due process, but will also give the SEC no incentive to engage in the rulemaking work the cryptocurrency industry and its customers need.”
A number of people on social media have expressed that Coinbase’s move is significant given that the crypto exchange was among the first to delist XRP following the SEC lawsuit against Ripple. The securities regulator announced its lawsuit on Dec. 22, 2020, and Coinbase suspended trading in XRP on Jan. 19, 2021.
Strategy advisor at Vaneck/MVIS Gabor Gurbacs commented: “Coinbase suspended XRP trading when the SEC sued Ripple alleging that XRP is a security. Many other platforms followed delisting XRP despite no verdict on the case. Now Coinbase supports XRP vs the SEC. The lesson: follow & comply with the law, but don’t try to be the judge/regulator.”
Tony Edward, the host of the Thinking Crypto Podcast, tweeted:
I don’t think folks realize how significant it is that Coinbase is filing an amicus brief on behalf of Ripple in the SEC lawsuit. I think the industry at large sees a victory for Ripple.
Last month, Ripple’s CEO said that he expects an answer in the SEC lawsuit in the first half of 2023. He noted that Ripple would consider a settlement with the SEC if the regulator states that XRP is not a security. The executive stressed that the XRP case “is about the whole [crypto] industry.”
What do you think about Coinbase supporting Ripple against the SEC? Let us know in the comments section below.