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In its filing, Coinbase raised the question of enforcing orders without any solid rulemaking by the SEC and deemed it inappropriate to adjudicate on summary judgment.
Ripple Labs is an American technology company that has recently been on the receiving end of the Securities and Exchange Commission’s (SEC) ire. Since SEC filed a lawsuit against Ripple at the end of 2020 accusing it of selling XRP as an unauthorized security, many companies have come forward in support. The latest firm to file a friend-of-the-court (amicus) brief in the continuing Ripple lawsuit is crypto exchange Coinbase. Some other companies expecting to level up Ripple’s case against the SEC include Blockchain Association, SpendTheBits, and lawyer John Deaton.
An Amicus brief is essentially a lawful document comprising suggestions and facts associated with a court case from an organization or individual which is not immediately a part of the case.
The exchange is emphasizing the fact that the regulatory bodies had not delivered explicit directions on how to go about the procedure. According to Coinbase, there was no fair notice before deciding to implement its mandate on the companies.
In its filing, Coinbase raised the question of enforcing orders without any solid rulemaking by the SEC and deemed it inappropriate to adjudicate on summary judgment. It also asserted that the SEC had been rather erratic about its method to enforce regulations, and this resulted in massive ambiguity for firms in the sector. It also mentioned its disappointment with SEC’s registration requirements for national securities exchanges, which according to the statement, was unfit in the way virtual asset platforms functioned. The requirement only enables broker-dealers to be a part of the registered securities exchanges, which would indicate that the retail customers would only trade via the services of broker-dealers who on top of it, would charge their transaction fees.
The statement by Coinbase concludes by claiming that while Ripple has been at the receiving end of aggressive enforcement criticism, other companies with equivalent services and offers are subject to none. In a nutshell, the filing, while raising the issue of bias and prejudice against one particular company, makes a clear argument against the regulatory authorities’ lack of rulemaking and enforcement plans, which resulted in ambiguity in the cryptocurrency world.
The filing also specifically disapproved of the theory that the crypto could be positioned like another conventional security, claiming that most of the digital currencies do not reflect ownership stakes or pay dividends the way shares can.
Coinbase’s chief legal officer Paul Grewal said that the most basic protection under the US Constitution is that the regulatory authorities can not charge against the conduct of a company’s practices before providing an appropriate warning to rebuke the conduct.