“Following a recent ruling by a U.S. judge, it has been determined that purchases of XRP tokens through exchanges do not qualify as securities transactions.
This decision has provided a significant boost to Coinbase’s defense in their ongoing legal battle against the U.S. Securities and Exchange Commission (SEC), as stated by Paul Grewal, Coinbase’s Chief Legal Officer, in an interview with CNBC. In June, the SEC filed a lawsuit against Coinbase, accusing the platform of operating as an unregistered exchange and broker.”
“Coinbase’s legal case against the U.S. Securities and Exchange Commission (SEC) has gained substantial strength following a significant court ruling that partially favored Ripple, a prominent cryptocurrency firm. In an interview with CNBC, Coinbase’s Chief Legal Officer stated that the recent ruling, which determined that purchases of XRP tokens through exchanges were not securities transactions, has bolstered Coinbase’s arguments. The SEC had previously sued Ripple, the company responsible for the XRP token, in 2020, accusing them of violating securities laws.”
“The recent court ruling regarding the status of XRP as a security has generated positive reactions within the cryptocurrency community, including exchanges that anticipate increased regulatory clarity as a result.
One such exchange is Coinbase, which is currently facing a lawsuit from the SEC alleging the operation of an unregistered exchange and broker. However, Coinbase’s confidence in its case against the SEC has been boosted by the latest XRP court opinion.
In an interview with CNBC, Coinbase’s Chief Legal Officer, Paul Grewal, expressed optimism, stating that the ruling reinforces their belief in a favorable outcome. Grewal further emphasized that the decision’s impact extends beyond XRP, as it could potentially exempt numerous other cryptocurrencies from security regulations. However, it’s worth noting that part of the judgement categorized the sale of XRP to sophisticated investors or institutional clients as a securities transaction.”
“As Coinbase continues its efforts to expand its institutional trading platform, Chief Legal Officer Paul Grewal dismissed concerns related to the part of the case involving Ripple’s sale of XRP to institutional clients. Grewal expressed confidence that all types of investors, both institutional and retail, can find reassurance in the court’s clear determination that tokens traded on exchanges, through arm’s length transactions, are not considered securities. He emphasized that this ruling provides a strong indication that tokens are treated differently in the context of exchange trading.”
SEC slammed
“The classification of cryptoassets as securities carries significant implications, including the requirement for registration with the SEC and adherence to strict disclosure regulations. It would also grant the SEC authority over these assets and associated entities like cryptocurrency exchanges.
While the SEC has maintained that most cryptocurrencies are securities, the recent ruling on XRP appears to have weakened their argument.
In the past month, the crypto industry has criticized the SEC, accusing the agency of enforcing regulations without collaborating with the industry. Tyler Winklevoss, co-founder of Gemini cryptocurrency exchange, which is also facing an SEC lawsuit, referred to the regulator as a “failed institution.”
Regarding the SEC’s actions, Coinbase’s Grewal expressed his belief that they were not engaged in an ideological battle against the crypto industry, but rather acting in good faith. However, he noted that they have made mistakes.
Grewal suggested that there has been a lack of leadership in fostering constructive engagement with the industry and other stakeholders, instead resorting to litigation.
He called for the establishment of new rules to address the unique challenges posed by this emerging technology.”