Ripple and Coinbase aim to leverage judge's ruling in SEC's Binance case

Coinbase and Ripple Labs are looking to leverage their cases with the U.S. Securities and Exchange Commission by citing a recent order that gave Binance a win for how secondary sales of crypto are treated.

Over the past few days, Coinbase and Ripple have pointed to a lack of clarity on how crypto is regulated in filings submitted in their respective cases.

"Binance further supports requiring the SEC to engage in rulemaking regarding digital assets," Coinbase said in a court filing on Tuesday. "As Coinbase has explained, rulemaking is required here because the SEC has adopted a novel and sweeping, yet still indeterminate, view of the securities laws—one that it has never coherently explained but is attempting to impose retroactively on the digital-asset industry through a scorched-earth enforcement campaign."

This comes as Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia mostly rejected Binance's push to dismiss its case with the SEC last week, but did dismiss some of the SEC's points, including that secondary sales of BNB were securities.

Despite Judge Jackson's ruling to move forward with almost all of the SEC's claims, legal experts in the crypto industry celebrated the dismissal of the secondary sales charge and said the order gave the overall impression that rulings on crypto should be taken on a case-by-case basis.

Judge Jackson's opinion "compounds the SEC-induced confusion for the industry," Coinbase said in its filing in the Court of Appeals for the Third Circuit. The Binance opinion confirms that the court should direct the SEC to begin rulemaking, Coinbase added. That court is weighing a case brought by Coinbase in April 2023 where the exchange is trying to get agency to provide a yes or no answer to its petition for rulemaking for the crypto industry.

Coinbase posted a similar filing on Monday, leveraging the Binance order in its case against the SEC for allegedly operating as an unregistered exchange.

"This underscores the urgent need for appellate review to bring clarity to the application of the securities laws and the regulation of crypto market participants," Coinbase said in the filing .

Ripple Labs also filed a "supplemental authority" on Tuesday, citing Judge Jackson's stance that crypto does not fit "neatly" into the Howey opinion and that deciding to oversee the crypto industry on a case-by-case basis was "probably not an efficient way to proceed.

Howey is based on a 1946 U.S. Supreme Court case frequently cited by the SEC, to determine if an asset qualifies as an investment contract and, therefore, a security.

"This observation supports Ripple’s argument that providing clarity on the legality of the different types of sales of XRP was the most significant aspect of the Court’s summary judgment decision," Ripple said in its filing.

The SEC and Ripple have been battling in court for years after the SEC accused the firm of raising $1.3 billion through the sale of XRP, which it says is an unregistered security. Last year, Judge Analisa Torres of New York ruled that some of Ripple’s sales, called programmatic, of XRP did not violate securities laws because of a blind bid process in place for them. She did, however, rule that other direct sales of the token to institutional investors were securities.

The SEC's cases against Coinbase, Ripple and Binance are ongoing. A scheduling conference is scheduled for July 9 in the agency's case against Binance. The SEC sued Binance and its former CEO Changpeng Zhao last year, accusing the crypto exchange of lying to customers, failing to restrict U.S. investors from accessing Binance.com, misdirecting capital to separated investment funds owned by Zhao, and operating as an unregistered exchange.

Zhao is currently serving jail time for his charges from the Department of Justice.