The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has taken a significant turn with a recent ruling from the Second Circuit Court of Appeals. This decision, concerning a separate lawsuit against cryptocurrency exchange Coinbase, offers potential advantages for Ripple in its ongoing case.
Coinbase Lawsuit Clarifies Secondary Market Sales
The crux of the recent development lies in a lawsuit filed against Coinbase by several investors. The plaintiffs argued that Coinbase should be held liable for selling unregistered securities in the form of various cryptocurrencies on its platform.
The Second Circuit Court located in Manhattan, New York, issued a key ruling that secondary market sales of cryptocurrencies on exchanges like Coinbase do not constitute securities transactions under federal law.
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This decision provides much-needed clarity for the cryptocurrency industry. Coinbase’s Chief Legal Officer, Paul Grewal, emphasized on social media that the court definitively stated there’s “no private liability for the secondary trading of digital assets” on platforms like Coinbase. The court agreed with Coinbase that the plaintiffs’ claims of investment contracts based on secondary sales lacked merit.
Impact on Ripple vs. SEC Case
The SEC’s lawsuit against Ripple hinges on the classification of XRP as a security. The argument lies in whether XRP sales by Ripple itself constituted unregistered securities offerings. While a previous court decision in the Ripple case excluded programmatic sales of XRP from being securities, the status of secondary market sales remained uncertain.
Judge Analisa Torres, presiding over the Ripple case, previously declined to make the case a conclusive ruling on secondary market sales, deeming it outside the immediate scope of the case. This ambiguity fueled concerns within the XRP community, fearing the SEC could potentially appeal on this point later.
The Second Circuit Decision as Precedent
The recent decision in the Coinbase case establishes a strong legal precedent that could significantly impact the Ripple vs. SEC case. By definitively excluding secondary market sales from securities regulations, the Second Circuit ruling weakens the SEC’s potential arguments regarding XRP sales on secondary markets. This decision can be used by Ripple’s legal team to counter any future appeal by the SEC on this aspect of the case.
The news of the Second Circuit decision was met with a positive response from the XRP community, leading to a price increase of approximately 2.5%. While the price is currently at 0.595 with a 0.82% increase in the past 24 hours, this development signifies renewed optimism regarding the outcome of the Ripple vs. SEC case.
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Read Also: Attorney Jeremy Hogan Believes SEC Will Not Appeal If Ripple Wins XRP Lawsuit. Here’s Why
The legal battle between Ripple and the SEC is nearing its conclusion. The recent court decision offers a significant advantage for Ripple by providing a strong legal precedent regarding secondary market sales of cryptocurrencies.
While the final verdict remains to be seen, this development paves the way for a potentially favorable outcome for Ripple in its ongoing fight with the SEC.
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