If you’ve been around the crypto industry for a while, you’ve undoubtedly heard about the lawsuit between Ripple and the US Securities and Exchange Commission (SEC). The United States Financial Watchdog believes XRP qualifies as effect and that Ripple illegally marketed the coin. Normally, parties placing securities on the market must first register them.
In addition, unlicensed parties are prohibited from listing securities on their trading platform, and Binance and Coinbase have done so, according to the SEC.
1/ The stakes just keep getting higher for the ruling in SEC v. @Ripple.
— MetaLawMan (@MetaLawMan) June 8, 2023
The importance of Ripple vs SEC
You may now understand a little more why the case between Ripple and the SEC is so important. In fact, that lawsuit revolves around the question of whether a crypto such as XRP qualifies as a security for US law. If the court finds that XRP does indeed qualify as a security, it could have major consequences for both Coinbase and Binance in the United States.
That would mean that they have to remove a lot of tokens from their platforms, plus they will probably receive hefty fines. Making unregistered securities tradable is strictly prohibited.
Those rules exist to protect consumers from scams and other practices that can cause people to lose money. Ripple has been at odds with the SEC since December 2020 and a ruling in that case is expected relatively soon.
No binding effect
Funnily enough, attorney MetaLawMan says on Twitter that the judge’s ruling in the Ripple v. SEC case is not necessarily binding on Coinbase and Binance. However, it remains a judgment of a relatively high US court, which certainly carries value for Binance and Coinbase’s cases.
However, the court may opt for a different interpretation in those cases. In fact, pro-Ripple attorney John Deaton thinks the SEC is aware that the judge will rule quickly in their case against Ripple.
“I believe the SEC wanted to blow these cases out before the judge makes a decision, in case they suddenly get a bad result on their roof, which could cause a loss in political and legal momentum,” Deaton said of the SEC’s decision to crack down on Coinbase and Binance.