Coinbase SEC Ripple Lawsuit – Coinbase filed a case in the US Circuit Court against the Securities and Exchange Commission (SEC), which will be crucial to Ripple Labs and its legal conflict with the organization. The biggest US cryptocurrency exchange said in a blog post that the case concerns a ruling on a petition filed in July 2022.
In their petition, Coinbase requests that the SEC use its formal rulemaking process to give direction for the cryptocurrency business. Coinbase wants to compel the SEC to reply to the petition with a “yes” or “no” decision. The agency must respond to the petition in a timely way according to the law.
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However, the SEC has not yet received a response, which Coinbase claims is on purpose. As was clear during chairman Gary Gensler’s hearing before the US Congress last week, Coinbase asserts that the SEC has already made up its mind but is unwilling to share it. However, by declining to respond, the SEC denies Coinbase the opportunity for a judicial review:
In the case that the SEC rejects our rulemaking petition, as is its legal right, Coinbase would be permitted to legally contest the SEC’s ruling. The SEC and any other agency that has been petitioned for rulemaking must therefore reply to the petition in order for the public to ever use their right to ask a court if the agency’s decision was appropriate.
Coinbase’s complaint just requests that the SEC make its decision public in this regard. Paul Grewal, chief legal officer of Coinbase, stated in the blog post, “We are simply asking the Court to order the SEC to respond at all, which they are legally obligated to do.”
Understanding the Legal Battle Between Ripple and the SEC: Implications and Significance
In addition to bringing regulatory clarification, Coinbase’s case may directly affect the legal dispute between Ripple and the SEC. It’s the second Writ of Mandamus filed in connection with cryptocurrencies, as XRP community lawyer John E. Deaton revealed through Twitter.
Deaton said, “I adore the petition since I filed the first Writ of Mandamus in the history of cryptocurrency when I sued the SEC asking a judge to order the SEC to do its job and update the Ripple Complaint to include just direct sales by Ripple.”
Beyond that, Ripple is also affected by Coinbase’s action against the SEC. According to attorney Bill Morgan, Coinbase and Ripple, both cited the Hinman speech, in which the latter purportedly issued a judgment in favor of Ether (ETH), the second-largest cryptocurrency.
It will be interesting to see how persuasive the case is. The SEC asserts, as Morgan notes, that the Hinman speech was about the former department head’s personal opinions. Hinman’s remark was not ruled to be an official SEC declaration by a court as of yet.
Coinbase quotes a statement by SEC Commissioner Hester Peirce, which demonstrates that market participants who attempted to behave in good faith were vulnerable to regulatory actions. This statement may be instructive.
Morgan’s judgment is this:
Whatever your opinion on whether or not cryptocurrencies are securities, presuming the registration process is not appropriate for cryptocurrencies, portrays the SEC in a negative light and suggests that it is acting with ulterior motives.
Ripple and its fair notice defense should therefore have yet another strong justification thanks to Coinbase’s case. According to a previous report, Judge Torres of the U.S. District Court for Southern New York might issue a decision at any moment.
At the time of publication, the XRP price was $0.4563.