In an unexpected twist, the well-known cryptocurrency exchange, Coinbase, has drawn upon the recent Ripple case as a shield in its ongoing battle with the Securities and Exchange Commission (SEC). As the narrative unfolds, the impact of the Ripple case on other crypto-related lawsuits becomes increasingly apparent.
Quoting Ripple’s Precedent
Coinbase has been embroiled in a legal skirmish with the SEC, with the agency seeking to categorize a straightforward asset sale as a security. In a legal brief submitted to the U.S. District Court for the Southern District of New York, Coinbase leveraged the Ripple case to fortify its argument. In 2020, the SEC and Ripple locked horns legally, with the SEC alleging that Ripple had raised $1.3 billion through the sale of XRP, which they declared an unregistered security.
The recent verdict in the Ripple case has provided a beacon of hope for Coinbase. The court ruled that certain sales of XRP by Ripple did not infringe securities laws due to the blind bid process implemented. This ruling has been perceived as a victory for the crypto sector, even though a different judge criticized it in a separate case involving the SEC and Terraform Labs.
Major Questions Doctrine in Play
Coinbase also introduced the “major questions doctrine” into its defense strategy against the SEC. This doctrine states that if an agency wants to rule on a matter of national significance, it must be backed by clear congressional authorization. The doctrine has two elements, one concerning the subject’s significant impact on the nation’s economy or public, and the other whether a federal agency has the explicit authority to enforce new regulations.
Despite Terraform’s lawyers also invoking the major questions doctrine, the judge dismissed the argument, stating that the crypto industry doesn’t carry the weight of “vast economic and political significance.” However, Coinbase countered, arguing that the wholesale regulation of secondary markets for trading digital assets is ‘extraordinary,’ and the digital asset industry, valued at around $1 trillion, represents a ‘significant portion of the American economy.’
The Ripple Case: A Beacon of Hope for Crypto?
The Ripple case’s recent decision has sparked a ray of hope for the crypto industry, potentially paving the way for a more nuanced approach to crypto regulation. This could prove invaluable for platforms like cryptoview.io, which provides a comprehensive view of the crypto market.
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With the Ripple case acting as a beacon, the crypto industry may see a shift in how it’s perceived and regulated. However, as Coinbase aptly put it, “The SEC’s authority is clear as mud,” indicating that the road to clarity is still a long one.
