Coinbase Strengthens Legal Case Against SEC After Ripple Ruling, Says Legal Chief
Coinbase’s legal chief has stated that the recent court ruling in favor of Ripple has bolstered the company’s arguments in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). The ruling determined that XRP token purchases through exchanges were not securities transactions. The SEC had sued Ripple in 2020, alleging violations of securities laws.
The judge’s decision has been celebrated by the cryptocurrency community and exchanges, as it is expected to bring more regulatory clarity. Coinbase, which is facing its own lawsuit by the SEC for alleged unregistered exchange and broker operations, has gained confidence from the Ripple ruling in its defense against the SEC.
Paul Grewal, Coinbase’s chief legal officer, expressed optimism about winning the case against the SEC and stated that the recent decision has further strengthened their position. Grewal emphasized that the ruling challenges the notion that securities are being traded on exchanges when investors trade assets, benefiting exchanges, tokens listed on exchanges, and regular investors.
The significance of the XRP ruling extends beyond Coinbase’s case. If XRP is not considered a security, it raises hope that many other cryptocurrencies will also be exempt from securities regulations. However, it’s worth noting that the judgement did classify selling XRP to sophisticated investors or institutional clients as a securities transaction.
Regarding this aspect, Grewal dismissed its impact on Coinbase, as it pertained specifically to how Ripple sold XRP to institutional clients. He highlighted the court’s affirmation that tokens traded on exchanges, under arm’s length transactions, are not treated as securities.
The determination of whether crypto assets should be classified as securities holds significant implications. If deemed securities, cryptocurrencies would require SEC registration and be subject to strict disclosure requirements. The SEC has asserted that most cryptocurrencies are securities, but the XRP ruling appears to weaken their argument.
In recent weeks, the crypto industry has criticized the SEC, accusing the agency of enforcing regulations rather than collaborating with the industry.
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