Coinbase joins crypto supporters siding with Ripple in SEC case

A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken, March 4, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) - Cryptocurrency exchange Coinbase Inc voiced support for Ripple in the blockchain company's legal battle with the U.S. Securities and Exchange Commission, joining a growing number of cryptocurrency proponents filing briefs in the case.

In a proposed amicus brief on Monday, Coinbase urged U.S. District Judge Analisa Torres to let a jury hear Ripple's argument that the company lacked notice that XRP, now the world's sixth-largest cryptocurrency by market value, was an unregistered security.

The Ripple case has broad potential legal consequences for the cryptocurrency industry, which occupies a regulatory gray area in the U.S.

Ripple's founders created XRP in 2012. The SEC sued the San Francisco-based company and its current and former chief executives in December 2020, alleging they have been conducting a $1.3 billion unregistered securities offering since the token's creation.

The case "caused immediate collateral harms to market participants" as U.S. exchanges including Coinbase subsequently delisted XRP, the company said.

Ripple has asked the judge to rule XRP is not a security, and the SEC has asked her to rule that it is.

The judge could grant either side a win without sending the case to trial, or decide to narrow the issues that go before a jury.

In the meantime, Torres has allowed several interested parties to weigh in, including a group of XRP holders who have urged her to rule in favor of Ripple.

Torres has also accepted briefs from companies that say they rely on XRP technology, a cryptocurrency industry group, and a legal nonprofit that says it represents clients against SEC "overreach."

The Crypto Council for Innovation, a lobbying group backed by Andreessen Horowitz, is among those still awaiting permission to file briefs.

The case is SEC v. Ripple Labs Inc, U.S. District Court, Southern District of New York, No. 20-CV-10832.

For Ripple: Andrew Ceresney of Debevoise & Plimpton

For the SEC: Pascale Guerrier and Stewart Ladan

For Coinbase: Nola Heller and Samson Enzer of Cahill Gordon & Reindel

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Thomson Reuters

Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com