The situation between Coinbase, Binance, and the United States Securities and Exchange Commission is likely to get ugly before a resolution is reached in one direction or another. However, Ripple has been at the forefront of the SEC’s legal actions as it received the first blow from the securities regulator during the winter of 2020.
While the class action has dragged on for nearly three years now, a favorable outcome for the blockchain firm is expected to be instrumental in determining the SEC’s case against both Coinbase and Binance.
Impact of Ripple’s vs SEC Resolution on Coinbase, Binance
Lawyer James Murphy said that if Judge Torres presiding over the SEC vs Ripple case, rules that XRP tokens trading on secondary markets are not securities, it would “undermine” the entire basis for the regulator’s case against the two exchange giants.
The SEC sued Coinbase for operating an unregistered securities exchange, broker-dealer, and clearing broker and claims that 13 tokens traded on the platform are securities. But, if those 13 tokens are judged “not” to be securities, then the SEC will be left with no case.
Murphy explained that a ruling by the judge would not be a “binding precedent” in other cases, which means that “other judges will not be bound to rule the same way” since only decisions of the Court of Appeals and the Supreme Court have that influence. Despite this, Murphy believes Judge Rearden, who is assigned to the Coinbase case, will pay very close attention to Judge Torres’ legal reasoning in ruling whether XRP is a security.
“And I believe Judge Rearden would follow that same reasoning as she analyzes whether the 13 tokens cited in the Coinbase complaint are securities. Judges within the same court do disagree with one another occasionally. But I believe Judge Rearden (with only 6 months on the job) is not likely to disagree with the legal reasoning of her experienced fellow Judge in such an enormously consequential case.”
Battle Favors Ripple
Despite the SEC’s full-blown blitz on the crypto industry, the agency appears to be tensed as multiple attempts to seal the infamous Hinman Speech documents failed, in what is being considered one of the many small victories for Ripple.
The man in question – William Hinman – was the director of the SEC’s corporation finance division from 2017 through 2020. In a now-controversial speech given in 2018, Hinman spoke about how decentralization impacts Ethereum and Bitcoin’s regulatory classification and reportedly indicated that the SEC did not consider two crypto-assets as securities at the time.
Ripple lawyers, on the other hand, have contested to learn more about how Hinman came to that conclusion, which could affect XRP’s classification. The SEC has until June 13 to provide all the unredacted emails of Hinman’s internal communications.
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