- Digital asset lawyers say the judgment in the SEC and Ripple case could have substantial implications for the sector going forward.
- Despite initial anger following the lawsuit against Binance and Coinbase, crypto executives now see it as a platform to get clear regulations.
- The digital asset community follows the cases keenly, backing both exchanges and criticising Gensler and the SEC.
The case between the Securities and Exchange Commission (SEC) v Ripple (XRP), filed in Dec 2020, is now more thrilling in its late stages as a potentially favourable ruling could spark off countless wins for the industry.
Web3 lawyers have expressed a close relationship between the Ripple case and the recent Binance-Coinbase lawsuit by the SEC. A ruling by the trial judge on whether XRP constitutes securities in the secondary market could set the tone for further decisions.
James Murphy, a crypto lawyer in a series of tweets, noted that a win for Ripple could “undermine the entire basis for the SEC’s case” against both exchanges it sued for allegedly offering trading services on unregistered securities. However, he stated that while it is only a convincing and persuasive precedent, it is not legally binding.
This means that the courts in Coinbase and Binance cases “not be bound to rule the same way” because only the Supreme Court of Appeal can determine binding precedents. Murphy, however, believes that the court will follow the Ripple matter closely as they serve in the same court in lower Manhattan.
Similarly, Bill Morgan, a partner at Morgan Mac Lawyers, explained that the judgment would be a game changer for the industry and the SEC, depending on where the pendulum swings.
“If they lose badly in the Ripple case, they go forwards with Coinbase and Binance with a substantial judgment against them. Obviously, Coinbase and Binance will use that to their advantage that the sales of XRP are not an investment contract,” he added.
Others allege a political undertone
Since Gary Gensler and the SEC launched its renewed offensive on the digital asset market, crypto users and industry players have accused the Commission of bias toward certain assets and markets. Pro-XRP lawyer John Deaton feels the case between XRP and both exchanges are related, leading to the Commission’s decision to file the cases at this time.
“I believe the SEC wanted to get those cases filed before that decision just in case it is a bad result for the SEC, possibly causing it to lose some political and legal momentum,” he explained.
Deaton further asserted that the Commission would tone down its aggression on cryptocurrency firms when big financial institutions acquire more shares in digital assets.
“Once JPMorgan, Goldman Sachs, or other traditional players get a bigger slice of the crypto market, then the SEC will become more reasonable,” he added.