The legal battles between the SEC and cryptocurrency companies like Ripple and potentially Coinbase could culminate in a landmark showdown at the U.S. Supreme Court, according to a former SEC litigator.
The Heart of the Matter
The core issue revolves around defining what constitutes security in the context of digital assets. Linda Steward, speaking at Columbia Business School, argued that the SEC’s classification of token sales and offerings (like Ripple’s XRP) as securities doesn’t automatically categorize the tokens themselves as securities.
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Ripple’s Ongoing Fight
Ripple has been embroiled in a legal battle with the SEC for years, incurring hefty fines along the way. However, they secured a partial victory last July when a judge ruled that secondary market sales of XRP aren’t considered security offerings – a decision the SEC is likely to appeal. Ripple’s CEO, Brad Garlinghouse, has expressed his unwavering commitment to fighting for his company and is prepared to take the case to the Supreme Court.
Coinbase Enters the Fray
Steward, who also participated in the SEC’s lawsuits against FTX and Terra, believes the Coinbase case could follow a similar trajectory, potentially reaching the Supreme Court. Her departure from the SEC in February to join White & Case coincides with these ongoing legal proceedings.
Ripple’s Chief Legal Officer, Stuart Alderoty, highlights the SEC’s history of losing cases before the Supreme Court, bolstering Ripple’s confidence in their legal standing.
Implications for Crypto Industry
A Supreme Court ruling would offer much-needed clarity on how securities laws apply to cryptocurrencies. This could significantly impact the entire crypto industry by establishing a legal framework for token offerings and trading activities.
While the short-term outcome remains unclear, the possibility of these cases reaching the Supreme Court raises the stakes considerably. A definitive ruling would have far-reaching consequences for the future of cryptocurrency regulation in the United States.