Coinbase goes in full support of crypto
Coinbase knows the SEC is not an ally of crypto, that much has been made clear. With numerous regulations and constant hounding of projects, companies, and platforms, Gary Gensler and his team have been a thorn in the sides of many that want to build and grow in web3. One company that has had some of the most problems with the SEC is Ripple. As the company continues to deal with legal proceedings involving the SEC it would seem some crypto firms are coming to the aid of Ripple. Recently Coinbase has joined Ripple in the battle against the SEC.
SEC vs Ripple
The case against Ripple is mostly about alleged violations for selling its XRP token as an unregistered security. The lawsuit was filed in December of 2020 against Ripple Labs and its co-founder Christian Larsen and CEO Brad Garlinghouse and states the company has raised $1.3 billion since 2013, all in unregistered securities offerings.
Coinbase Joins the fight
Coinbase joining in is a move that could be seen as controversial by some in the crypto community, but it is one that could help propel crypto into the mainstream. Coinbase has always been a company that has tried to stay within the bounds of regulation. This is a large part of why they have been so successful. When other exchanges were getting shut down by the SEC Coinbase was able to weather the storm and remain open. Now it would appear they are using this experience to help Ripple. The crypto firm stated that it had a”unique perspective on the issues at stake in this matter.”
The news was first reported by The Block. According to their report, Coinbase has filed an amicus brief in support of Ripple. An amicus brief is a legal document filed in court by someone who is not a party to the case but wishes to offer information that could be helpful to the court. nIn the brief, Coinbase argues that the SEC’s actions against Ripple would “chill innovation in the United States” and make it harder for firms like Coinbase to operate.
The move is a surprising one as Coinbase has been mostly quiet on the legal proceedings thus far. The amicus brief filed by Coinbase is in support of Ripple’s motion to dismiss the SEC’s lawsuit.
In the brief, Coinbase makes the argument that the SEC has not been clear on what exactly they are accusing Ripple of. Coinbase goes on to say that the “lack of clarity and absence of a regulatory framework governing digital assets” from the SEC “threatens to a chilling effect on innovation in the U.S. cryptocurrency industry.” This is a valid argument as the SEC has been very vague in its lawsuit against Ripple.
The vagueness of the SEC’s lawsuit is one of the main points that Ripple has been fighting against. They have argued that the SEC has not provided any clear guidelines on what exactly constitutes security. This lack of clarity has made it difficult for companies to know how to comply with the law.
According to Coinbase, the SEC has to follow the fundamental due process protection guaranteed by the Constitution which proclaims that “government agencies cannot condemn conduct as a violation of law without providing fair notice that the conduct is illegal.” In another statement on the filing Coinbase states
“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,”Coinbase
Coinbase continued by stating that most digital assets are not representations of ownership nor do they pay returns to investors in the same way shares of a publicly traded company do.
“Existing SEC registration requirements for national securities exchanges are currently unsuitable to the way digital asset platforms operate. The end result is extraordinarily costly to U.S. innovation in this new industry.”Coinbase
Coinbase is not just backing Ripple against the SEC but also Grayscale as well. The company has been very vocally supportive of the crypto industry lately. The crypto trading firm spoke on the SEC case with Grayscale stating that the SEC was “unjustifiably limiting investor choice engaging in an arbitrary and capricious practice of picking winners and losers among investment products.” Coinbase also funded a joint lawsuit against the U.S Department of Treasury as they put heavy American sanctions on Tornado Cash.
In a comment on the situation with Tornado Cash, Brian Armstrong, CEO of Coinbase likened the move to sanction open source software to “shutting down a highway because robbers used it to flee a crime scene” saying it was not the best way to solve a problem and ends up punishing the wrong people.
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