A U.S. court ruling partly in Ripple’s favor may augur well for other cryptocurrency firms fighting litigation from the Securities and Exchange Commission – if the decision survives potential appeal.
This year, the SEC has come after exchange platforms such as Coinbase (COIN), Binance and Bittrex for operating what it says are unregistered trading platforms that list what the agency deems unregistered securities including Cardano (ADA), Solana (SOL) Polygon (MATIC) and Filecoin (FIL). Following Thursday’s ruling by the U.S. District Court for the Southern District of New York that certain sales and distributions of XRP tokens by Ripple and its executives were not investment contracts, those other defendants may have a new arrow in their quiver.
“This is a significant opinion that has the potential to change the landscape of the SEC’s enforcement efforts, or the success of those efforts,” said Teresa Goody Guillén, a former attorney with the SEC office of the general counsel, and now a partner with law firm BakerHostetler. “This is also helpful precedent for Coinbase and Binance to defend against allegations that they are operating as unregistered securities exchanges, brokers and clearing agencies.”
Several legal experts were quick to pour cold water on the excitement, arguing that the summary judgment may rest on shaky ground, and may not translate to the crypto industry’s hoped-for change in the way it’s treated by the SEC.
“The SEC will look to the parts of the court decision that are in its favor to justify its continued views on the regulatory status of coins and tokens – i.e., that they are all securities — and its continued approach to enforcing those views on the industry,” Joe Castelluccio, leader of law firm Mayer Brown’s fintech and digital assets, blockchain and crypto groups, wrote in an email.
According to Castelluccio, the portions of the decision that are in Ripple’s favor are “fairly fact-specific, and while there may be some that are similarly situated in the market, others in the market may find it challenging to rely on those portions of the decision if their circumstances do not directly align.”
Castelluccio added that the case “does not provide regulatory or legal clarity for the numerous other regulatory issues that the digital assets…
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