XRP Legal Chief Strongly Denies SEC’s Allegations in Coinbase Lawsuit as Groundless

The post XRP Legal Chief Strongly Denies SEC’s Allegations in Coinbase Lawsuit as Groundless appeared first on Coinpedia Fintech News

In the legal arena, a pivotal question looms: Did Coinbase overstep its bounds, acting as an unregistered exchange, broker, and clearing agency in securities transactions? The outcome of this Coinbase vs. SEC case teeters on the edge of uncertainty, leaving the crypto space on tenterhooks. As per the recent filing, Coinbase has good odds to win, while SEC is in a dire position to win the case to satiate their ego spree. 

At its heart, this case is a clash of titans, marked by a profound disagreement. Ripple’s legal head, Stuart Alderoty, steps into the ring, taking a swing at the U.S. Securities and Exchange Commission (SEC). He calls out the SEC’s attempt to thwart Coinbase’s motion to dismiss the lawsuit, filed on June 6, 2023. The SEC alleges that Coinbase operated as an unregistered national securities exchange, broker, and clearing agency, setting the stage for a legal showdown of epic proportions. 

The Dice is on The XRP Ruling and Howey Test

Is it all messed up? The SEC responded to Coinbase’s citation of the XRP judgment in which Judge Analisa Torres declared Ripple to comply with U.S. federal securities laws when selling tokens to retail buyers in a filing dated October 3, 2023. According to the regulator, some of Coinbase’s crypto assets do pass the Howey Test for investment contracts. A positive result on this test indicates that investors can anticipate a favorable return on their capital.

Crypto Reaction on SEC Claims 

Alderoty of Ripple called the SEC’s Coinbase lawsuit claims unjustified. Before the SEC action, John Deaton, the lawyer representing thousands of XRP token holders, questioned the SEC’s use of the Howey Test, noting that crypto token sales have never been tied to it.

In order of the universe lies John Deaton’s predictions; in a tweet thread, he overshooted his estimate of Coinbase’s chances of winning from 40% to 50% after reviewing the SEC’s opposition. He believes the SEC’s argument lacks a legal foundation. The majority of the legal fraternity is united against SEC’s crypto outlook. 

Judicial Response to SEC Claims

In a highly intense climax, Judge Torres, on October 4, 2023, denied the SEC’s motion for an interlocutory appeal, trailblazing that the SEC failed to demonstrate how the Court wrongly applied the Howey Test to the facts of the Ripple lawsuit. 

SEC’s Counter Response May not Impress Judges

The SEC, however, firmly rebuffs this notion, making it clear that any crypto asset traded on Coinbase’s platform qualifies as a security if it meets the criteria of the Howey test—a well-established legal benchmark for defining investment contracts.

Coinbase’s Stance

Paul Grewal, Coinbase’s Chief Legal Officer, said the SEC’s enforcement-based policy ignores the 52-million-strong U.S. crypto ecosystem. Over 40 crypto businesses met in Washington D.C. to argue for consumer protection, innovation, and economic growth legislation.