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Ripple's Chief Technology Officer Offers Perspective on Amici Involvement
Prominent supporters including U.S. lawmaker Cynthia Lummis and major organizations have filed amicus briefs in favor of Coinbase in its legal battle against the SEC
The legal battle between U.S. cryptocurrency exchange Coinbase and the Securities and Exchange Commission (SEC) took a significant turn as several notable individuals and organizations filed amicus briefs in support of Coinbase. Among these supporters are U.S. lawmaker Cynthia Lummis, the Blockchain Association, the Crypto Council for Innovation, the Chamber of Digital Commerce, the DeFi Education Fund, the Chamber of Progress, the Consumer Technology Association, Andreessen Horowitz, Paradigm, and six law professors.
SEC v. Coinbase, Big Update:
Six Securities Law Scholars File Devastating Amicus Brief in Support of @Coinbase.
Law Professors from Yale, Univ. of Chicago, UCLA, Fordham, Boston University and Widener filed an amicus brief last night that Absolutely Shreds the SEC’s…
— MetaLawMan (@MetaLawMan) August 12, 2023
Coinbase Case Getting Some Involvement
Expressing his gratitude, Paul Grewal, Coinbase’s chief legal officer, stated that these briefs would assist the Court in understanding the legal errors made by the SEC.
However, one amicus brief, in particular, has caught the attention of legal expert “MetaLawMan.” This brief, prepared by six securities law scholars, is described as “devastating” and marks a significant update in the Coinbase case. The law professors involved in this brief hail from prestigious institutions such as Yale, the University of Chicago, UCLA, Fordham, Boston University, and Widener University.
According to MetaLawMan, this amicus brief skillfully traces the historical definition of “investment contract” before, during, and after the enactment of the federal Securities Act in 1933. The brief is believed to dismantle the SEC’s “investment contract” theory and deal a substantial blow to its argument that crypto tokens traded on secondary markets are indeed investment contracts.
While the amicus briefs from the law professors have been met with appreciation, there have also been criticisms and discussions regarding the weaknesses in their arguments.
Ripple CTO Point of View
Ripple CTO David Schwartz pointed out that the brief failed to adequately address the holding in Joiner, which he considers to be the weakest point in the brief’s argument. Schwartz emphasized that Joiner stated that if a reasonable buyer believed they had enforceable contractual rights, it could be sufficient.
Additionally, Twitter user David Barrera highlighted the law scholars’ apparent disregard for the actual holding in Joiner, the first Supreme Court case interpreting the definition of an investment contract. Barrera pointed out that, contrary to the scholars’ claim, the issuer in Joiner did not make contractual undertakings related to the future value of a business’s income, profits, or assets.
The law scholars’ brief asserts that an investment contract requires contractual undertakings related to delivering future value reflecting the income, profits, or assets of a business. However, according to Barrera, this assertion contradicts the holding in Joiner.
The involvement of these law professors and their amicus briefs adds a new dimension to the Coinbase SEC lawsuit. As the case progresses, the Court will have further insights from a range of legal experts, potentially influencing the outcome of the lawsuit.
