Crypto exchange Coinbase has filed an amicus brief in support of Ripple (XRP), arguing that the SEC’s lawsuit led to retail traders losing $15 billion.
According to the exchange, the SEC action forced U.S.-based exchanges to delist XRP, causing retail customers significant losses as the coin’s market cap declined.
The U.S.-based crypto firm continued that it had repeatedly urged the SEC to guide the crypto space; however, the regulator was focused on regulating the industry through individual enforcement actions.
“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.”
Coinbase added that the SEC had subjected Ripple to “extensive enforcement scrutiny,” while other firms with identical products or services have been left off. It stated that the regulator’s existing registration requirements were unsuitable for the way digital assets platforms operated, adding that:
“Existing SEC requirements, however, only allow broker-dealers to be members of registered securities exchanges, meaning that retail customers can only trade assets on exchanges indirectly by using the services of broker-dealers that charge transaction fees and add intermediation risks that could be avoided on digital asset trading platforms, again to the benefit of customers.”
Coinbase chief legal officer Paul Grewal said:
“By suing sellers of XRP tokens after making public statements signaling that those transactions were lawful, the SEC has lost sight of this bedrock principle.”
Crypto community bands together for Ripple
Apart from Coinbase’s court filing in support of Ripple, several crypto-related firms, individuals, and associations have also filed motions supporting the embattled payment company.
Pro-XRP lawyer John Deaton filed an amicus brief on behalf of XRP holders against the SEC’s request for summary judgment. According to Deaton, the SEC is using this lawsuit as a test case to expand its jurisdictional reach into the crypto space.
“There are millions of XRP holders being held hostage as collateral damage while the SEC engages in a jurisdictional power grab. Those innocent holders have been abandoned by the SEC ‘adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law.’”
Crypto advocacy group the Blockchain Association also filed an amicus brief on Oct. 28 stating that SEC chairman Gary Gensler’s views could devastate the crypto industry.
Other crypto-related organizations like venture capital Valhil Capital and Crypto Council for Innovation have also submitted briefs supporting Ripple.
SEC files to redact Hinman document
Meanwhile, the SEC scored a minor victory recently as Judge Sarah Netburn granted its request for two redactions on former Director Bill Hinman’s documents.
The commission wants to redact two drafts of Hinman’s June 2018 speech containing pending determinations.
The SEC recently released the Hinman documents after six court judgments had ordered them to release the documents to Ripple.