- The SEC has filed a lawsuit against Coinbase, alleging that the exchange operated as an unregistered securities exchange, broker-dealer, and clearing broker.
- Murphy clarified that a ruling by Judge Torres would not establish a legally binding precedent in other cases.
According to lawyer James Murphy, if Judge Torres, who presides over the SEC vs Ripple case, determines that XRP tokens traded on secondary markets are not securities, it would significantly weaken the foundation of the regulator’s case against the two major exchanges.
The SEC has filed a lawsuit against Coinbase, alleging that the exchange operated as an unregistered securities exchange, broker-dealer, and clearing broker. The regulatory body claims that 13 tokens traded on the platform are securities. However, if these 13 tokens are ultimately deemed “not” to be securities, the SEC would be left without a case.
Murphy clarified that a ruling by Judge Torres would not establish a legally binding precedent in other cases. Only decisions made by the Court of Appeals and the Supreme Court carry that level of influence. Nevertheless, Murphy believes that Judge Rearden, who is assigned to the Coinbase case, will closely consider the legal reasoning provided by Judge Torres when making a ruling on whether XRP is classified as 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.”
Ripple’s Legal Maneuver: Turning the Tide in the SEC vs Coinbase Battle
Despite the Securities and Exchange Commission’s (SEC) aggressive actions against the cryptocurrency industry, the agency is facing tension as its numerous attempts to withhold the notorious Hinman Speech documents have failed, marking a series of small victories for Ripple.
The individual in question, William Hinman, served as the director of the SEC’s corporation finance division from 2017 to 2020. In a speech delivered in 2018 that has since sparked controversy, Hinman discussed how decentralization impacts the regulatory classification of Ethereum and Bitcoin, suggesting that the SEC did not view these two cryptocurrencies as securities at that time.
However, Ripple’s legal team has raised objections and sought to obtain further information about the basis for Hinman’s conclusion, as it could have implications for the classification of XRP. The SEC has been given until June 13 to disclose all unredacted emails containing Hinman’s internal communications.
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