• Ripple is facing a class action lawsuit by the SEC.
• A favorable outcome for Ripple could potentially weaken the SEC’s case against Coinbase and Binance.
• If Judge Torres rules that XRP tokens traded on secondary markets are not securities, it would “undermine” the entire basis of the SEC’s case against Coinbase and Binance.
Ripple Vs. SEC Case
The United States Securities and Exchange Commission (SEC) has launched a legal action against cryptocurrency exchange giants Coinbase and Binance. Ripple, however, has been at the forefront of this legal battle as it received the first blow from the securities regulator during the winter of 2020 in form of a class action lawsuit. The situation between Coinbase, Binance, and the SEC is likely to get ugly before a resolution is reached in one direction or another.
Impact on Coinbase & Binance Cases
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 agency’s case against both exchange giants. The SEC sued Coinbase for operating an unregistered securities exchange broker-dealer, and clearing broker with 13 tokens being alleged as securities by them. But if those 13 tokens are judged “not” to be securities then there wouldn’t be any ground left for their case against either company. So essentially a resolution in favor of Ripple could lead to weakened cases against both Coinbase and Binance by the SEC.
Ruling Not Binding Precedent
Murphy further noted that even if Judge Torres does rule favorably towards Ripple, it won’t serve as a binding precedent in other cases which means each instance will have to be seen separately by courts depending upon specifics related to each one of them. He also said that this particular ruling won’t affect all cryptocurrencies but only XRP token specifically given its unique nature since others might end up classified differently than XRP due to certain differences present among them regarding security categorization criteria imposed by regulatory bodies worldwide including US government institutions like IRS etcetera
SEC’s Argument Against Exchanges
The argument presented by the SEC is that exchanges like Coinbase listed these tokens without proper registration under applicable laws making it illegal according to their viewpoint hence they requested injunctions preventing these companies from trading them until they comply with federal regulations pertaining to digital assets classified as securities or commodities depending upon characteristics possessed by each token respectively along with other relevant parameters used while deciding classification status regarding different coins/tokens available today
In conclusion, whether or not Judge Torres decides in favor of Ripple will play an instrumental role in determining what course of action ultimately gets taken when evaluating cases involving exchanges such as Coinbase & Binance since favorable ruling here could undermine entire basis upon which those proceedings were initiated thus leading towards much softer stance eventually adopted when dealing with aforementioned entities moving forward altogether post verdict being announced publicly soon enough hopefully