- Coinbase’s Chief Legal Officer informed the crypto community that the exchange filed a brief asking the court to dismiss the SEC’s case.
- Coinbase argues that the platform does not offer investment contracts and that the SEC has overreached.
- Pro-XRP analysts believe that dismissing the SEC’s case against Coinbase on the grounds of Ripple’s partial win could end the regulator’s crypto crackdown.
US Securities and Exchange Commission (SEC) Chair Gary Gensler prominently led the regulator in its legal battles against cryptocurrency projects and exchange platforms. The crypto community believes Chair Gensler’s crackdown on crypto could end if the Judge dismisses the SEC’s case against Coinbase.
Also read: Bitcoin price holds above $29,000 after below-expectations US NFP data
Coinbase files brief asking for SEC’s case against the exchange to be dismissed
Coinbase, one of the largest exchanges in the crypto ecosystem, recently filed a brief asking for the US financial regulator’s case against the platform to be dismissed. The Chief Legal Officer informed his 48,500 followers about the exchange’s new filing.
Coinbase argues that the exchange does not offer investment contracts and cites the Ripple ruling, where Judge Torres ruled that the XRP token is not an investment contract in interpreting the Supreme Court’s precedent.
Ripple’s partial win against the SEC plays a pivotal role in the SEC vs Coinbase lawsuit
While pro-XRP attorney John Deaton, analysts believe Ripple’s partial win in the lawsuit against the SEC is likely in trouble. If the judge in the SEC’s case against Coinbase dismisses the case brought by the regulator, the XRP community has a reason to celebrate the likely end of the crypto crusade.
The crypto analyst behind the Twitter handle @digitalassetbuy supports this thesis in his recent tweet:
If the judge dismisses the @coinbase case partially over the @ripple ruling, It would be the Death Blow to Gary's crypto crusade. https://t.co/hggDrq16uc pic.twitter.com/K8sWe6DaEw
— Digital Asset Investor.XRP (@digitalassetbuy) August 4, 2023
Will the SEC’s crypto crusade end?
According to the analyst, the Gary Gensler-led crypto crusade of the SEC could end with the judge’s decision in response to the exchange’s filing. Paul Grewal argues that the SEC has trampled the boundaries on the basic authority set by Congress.
By ignoring that precedent, the SEC has violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws. By ignoring that precedent, the SEC has trampled the strict boundaries on its basic authority set by Congress. 2/3
— paulgrewal.eth (@iampaulgrewal) August 4, 2023
The Coinbase CLO’s tweet describes his expectations from the judge’s ruling in the regulator’s case against the exchange. However, the pro-XRP community speculates a likely end to the SEC’s crypto crusade with a verdict in the Coinbase lawsuit.
SEC vs Ripple lawsuit FAQs
Is XRP a security?
It depends on the transaction, according to a court ruling released on July 14:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
How does the ruling affect Ripple in its legal battle against the SEC?
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple breached the US securities law and must keep litigating over the $729 million received under written contracts.
What are the implications of the ruling for the overall crypto industry?
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set a precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
Is the SEC's stance toward crypto assets likely to change after the ruling?
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that most crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons to keep its current regulation strategy by enforcement.
Can the court ruling be overturned?
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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