Cryptocurrency exchange Coinbase Global Inc (NASDAQ:COIN) has petitioned a federal court to file an amicus curiae brief intending to support Ripple (CRYPTO: XRP) in its fight against the U.S. Securities and Exchange Commission, contending that the regulator has failed to keep pace with the digital assets industry.
In a series of tweets, Paul Grewal, Coinbase’s chief legal officer stated that the Constitution guarantees that government agencies cannot condemn conduct as a violation of law without providing fair notice that the conduct is illegal and that 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.
SEC created uncertainty in the crypto industry
In its filing, Coinbase noted that in the absence of SEC rules governing the cryptocurrency industry, the issue of whether the SEC gave fair notice before taking enforcement action against sales of one of the thousands of distinctive digital assets will frequently require a great deal of fact-finding, making it particularly unsuitable for summary judgment.
It added that the SEC has created uncertainty in the cryptocurrency sector by being inconsistent with its enforcement approach.
"In addition, existing SEC registration requirements for national securities exchanges are currently unsuitable to the way digital asset platforms operate," according to the filing.
"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 fee and add intermediation risks that could be avoided on digital asset trading platforms, again to the benefit of customers," the filing added.
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Crypto lawyer seeks permission to file amicus brief against the SEC
Coinbase’s SEC filing comes on the same day as the motion to file an amicus brief on behalf of the XRP "decentralized community" and briefs from the crypto advocacy group Crypto Council for Innovation and venture capital company Valhil Capital were filed by cryptocurrency lawyer John Deaton.
It also comes after the Blockchain Association, a group that promotes cryptocurrency, stated on Oct. 28 that it had filed its own amicus brief in support of Ripple and warned that SEC chairman Gary Gensler's views on securities rules might have "devastating implications" on the industry.
The SEC has been involved in a nearly two-year-long legal battle with Ripple Labs as it considers the sale of its XRP coins to be an unregistered security.
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