“There is So Much Wrong”: XRP’s Alderoty Slams SEC Lawsuit Against Coinbase

In the crypto world, a pivotal question looms: Did Coinbase overstep its bounds, acting as an unregistered exchange, broker, and clearing agency in securities transactions? The result of the Coinbase vs. SEC case is hanging in the balance, keeping the crypto community on edge. Recent reports suggest Coinbase has a good chance of winning, while the SEC is facing a tough challenge, trying to prove its views to others.

Giant vs Giant!

Ripple’s legal head, Stuart Alderoty, steps into the ring, taking a swing at the U.S. Securities and Exchange Commission (SEC). He calls out the SEC’s attempt to thwart Coinbase’s motion to dismiss the lawsuit, filed on June 6, 2023. The SEC alleges that Coinbase operated as an unregistered national securities exchange, broker, and clearing agency, setting the stage for a major legal battle.

The XRP Ruling

Is it all messed up? Coinbase mentioned the XRP judgment, where Judge Analisa Torres said Ripple followed U.S. federal securities laws when selling tokens to regular buyers in a filing on October 3, 2023. According to the regulator, some of Coinbase’s crypto assets meet the Howey Test’s criteria for investment deals. A positive result means investors can expect good returns on their investments.

Alderoty from Ripple said the SEC’s claims in the Coinbase lawsuit don’t make sense. Even before the SEC took action, John Deaton, the lawyer representing thousands of XRP token holders, questioned the SEC’s use of the Howey Test, saying it never applied to crypto token sales.

John Deaton’s Insights

In simpler terms, John Deaton’s predictions matter. He increased his estimate of Coinbase’s chances of winning from 40% to 50% after looking at the SEC’s opposition. He believes the SEC’s argument doesn’t have a strong legal basis. Most legal experts stand together against the SEC’s views on crypto.

Read More: John Deaton’s Bold Prediction: Coinbase Has a 50% Chance of Beating SEC

Judge Torres Slams SEC

In a highly intense climax, Judge Torres, on October 4, 2023, denied the SEC’s motion for an interlocutory appeal, confirming that the SEC failed to demonstrate how the Court wrongly applied the Howey Test to the facts of the Ripple lawsuit. 

However, the SEC disagrees strongly, saying any crypto asset traded on Coinbase is a security if it meets the Howey test criteria—a well-known legal way to define investment deals.

Coinbase’s Stance

Paul Grewal, Coinbase’s Chief Legal Officer, worries that the SEC’s enforcement-focused approach ignores the 52 million U.S. crypto users. More than 40 crypto businesses met in Washington D.C. to push for laws that protect consumers, encourage innovation, and boost economic growth.

Also Read: “The SEC Can’t Continue to Punish Crypto”: Coinbase CEO Slams Gary Gensler