SEC Might Settle with Ripple, Lose Coinbase Suit: Says Lawyer

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  • The SEC might settle its lawsuit with Ripple, claims crypto lawyer James Murphy.
  • The upcoming US elections might change the outcome for many crypto lawsuits.
  • Murphy also expects Coinbase to secure victory against the agency.

The United States Securities and Exchange Commission (SEC) might settle its lawsuit against blockchain firm Ripple and lose against American exchange Coinbase, says James “MetaLawMan” Murphy, a lawyer with expertise in digital assets and Web3. 

Speaking at the ‘Thinking Crypto’ podcast on February 10, Murphy pointed out that the SEC’s lawsuit against Ripple might end up with a settlement due to 2024 being an election year and new management taking over the agency. 

Settlement with Ripple

Murphy said that there is a difference between buying XRP and shares of a company like Amazon, with the latter being categorized as a security. He stated that US District Judge Analisa Torres made the correct decision in the case by granting Ripple a partial win while considering the blockchain firm’s sale of XRP tokens to institutions as security.  

Murphy said that as the lawsuit carries on, both the SEC and Ripple are going to appeal, with the former arguing that many institutional sales were made outside the regulator’s jurisdiction.

“One of the things I find really interesting is this is an election year and things could change dramatically,” Murphy noted while adding:

“The election could change the direction of the SEC right and as a result we could see not just Ripple but in other cases a very different counterparty in this litigation where they might be very much more interested in a reasonable settlement.”

Losing the Coinbase Lawsuit

Murphy highlighted the fact that it was the SEC that allowed Coinbase to go public in 2021 and asked Congress to provide the agency with the authority to regulate cryptocurrency exchanges.

SEC Chair Gary Gensler acknowledged that his agency and the Commodity Futures Trading Commission (CFTC) lacked the power to take enforcement actions against these firms in front of the House Financial Services Committee just twenty days after it allowed Coinbase to go public, Murphy noted.

“Then two years later he pivots and sues Coinbase for not registering as a Securities Exchange broker deal and clearing agency under existing SEC law for Nasdaq New York Stock Exchange,” Murphy pointed out.

Murphy said that Gensler’s acceptance that his agency lacks authority to regulate digital assets is on tape, and the public has seen it. The lawyer sees the regulator’s action in suing the crypto exchange as a breach of the Magna Carta and the American Constitution.

“I believe Coinbase will win eventually,” said MetaLawMan while noting that the 2024 elections will bring in a new SEC Chair and things might change for the digital asset sector.

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