According to a Coinbase user from the US, the crypto exchange knowingly engages in illegal securities trading via XRP. The California man has now filed a lawsuit against the exchange. Thomas C. Sandoval, a man from St. Louis County in the United States, considers the sale of XRP on Coinbase to be illegal securities trading. Finally, the U.S. Securities and Exchange Commission (SEC) considers XRP as collateral in its own indictment against Ripple. But are crypto exchanges really responsible here? Legal experts have doubts. So, before you buy Ripple, make sure you understand these unique risks as well as its legal, regulatory, and tax status here in the United States.
One of the possible reasons why holders have vigorously called for the recovery of XRP could lie in the new advances in this case. The judge asked the SEC`s lawyer: „Anyone who has sold XRP – including you and me – is selling illegal securities.“ The SEC lawyer replied, „No, according to Section 4, only Ripple and Ripple`s subsidiaries may have illegally sold XRP,“ and that „anyone who sold XRP“ did not sell „illegal securities.“ The SEC counsel`s answers can be interpreted to mean that US-based crypto exchanges are not responsible for sales and transactions of XRP. However, only the final result will show whether US exchanges are „resetting“ XRP. Due to the SEC`s indictment of Ripple, a customer of the largest crypto exchange in the United States now sees himself in the right. Coinbase is accused of knowingly engaging in illegal trading in securities. A corresponding lawsuit has now been filed in the U.S. District Court for the Northern District of California. The cryptocurrency industry and investors are monitoring the SEC`s lawsuit against Ripple not only to determine the legal status of XRP, but also for any precedent it might set for other cryptocurrencies. XRP is currently the sixth largest cryptocurrency in the world by market capitalization, which is over $40 billion. The price of XRP has risen nearly 36% over the past week and is trading at $1.35 at the time of writing, three times the December level before the trial.
The prosecutor, Thomas C. Sandoval, argues that Coinbase ultimately collected trading fees by selling XRP. However, these stem from an illegal transaction, as Coinbase does not have a license to trade securities. Disclaimer: Cryptocurrencies, including Ripple, are speculative, complex and carry significant risks – they are highly volatile and susceptible to secondary activity. Performance is unpredictable and past performance of XRP does not guarantee future performance. Consider your own situation and seek your own advice before relying on this information. You should also review the nature of a product or service (including its legal status and relevant regulatory requirements) and consult the websites of the relevant regulatory authorities before making a decision. Finder or the author may have interests in Ripple or any other cryptocurrency discussed. Uphold is one of the few brokers that has not made any changes to the XRP status on its platform, completely ignoring the legal conundrum of Ripple in the US. XRP could be purchased and was listed on Uphold all the time. From the beginning of 2021, XRP will no longer be available on most centralized US exchanges.
Ripple Labs, a company whose history is closely linked to XRP, has been engaged in a long legal battle with the Securities and Exchange Commission (SEC) since December 2020, and until there is a court ruling, XRP holders and anyone seeking to trade XRP will have to be patient. The lawsuit revolves around the SEC`s view of XRP as a security, a view that contradicts Ripple`s claims that XRP is a currency rather than a security. XRP is one of the large-cap crypto coins considered a safe investment. However, it is still the subject of litigation with the SEC, and until that is resolved, XRP is a risky investment. I think the risk of legal consequences for Coinbase or other crypto exchanges is significantly lower here than by continuing to trade an asset that the SEC deems illegal. In the current situation, there are mainly four applications in this case. The first is to force the company to discover documents related to the financial information of CEO Garlinghouse and President Larson. The second is the SEC`s motion against Ripple`s fair notification defense. The third is Garlinghouse and Larson`s motion to dismiss the lawsuit against them. Finally, Ripple filed a petition explaining why it took the SEC 8 years to file a lawsuit. An ongoing indictment for illegal securities trading could have undesirable consequences for this IPO. The evolution remains to be seen.
Stephen Palley, Anderson Kill`s partner, sees „some difficulties“ with the accusations against Coinbase. He told CoinDesk that such accusations are based only on „beliefs,“ not facts. „Such accusations are legally equivalent to `I think so, but I`m not sure.` The SEC filed a lawsuit against Ripple in December 2020, claiming that the distribution of $1.3 billion of XRP to stakeholders violated securities laws. While the trial of the case is ongoing, many cryptocurrency exchanges have responded by limiting or withdrawing support for XRP. Looking at the list of the most popular cryptocurrencies, XRP is at the top of the list for many people. However, due to the legal battle with the SEC, buying XRP in the US has become much more difficult, as almost all major public exchanges have suspended the Ripple token on their platforms. However, some of them still allow the purchase of XRP for US citizens, and we list them below. In response to a request for explanation, the SEC said it „does not comment beyond public filings.“ Ripple confirmed in an emailed statement that the lawsuit „has made it much more difficult for US individuals to access or use XRP.“ In the chosen exchange, find the XRP currency and enter the amount you want to invest. If there is anyone responsible, it is the projects behind the centralized coins and tokens. Crypto exchanges are just trading platforms, not issuers of digital assets.
And sometimes, XRP was (and still is) not (yet) considered an official security. Ripple was invented to be a decentralized open source alternative to sending money through the traditional banking system, which often adds processing fees to every transaction. According to Ripple`s website, you can send XRP from one digital wallet to another in just 3-5 seconds, paying a tiny fee in the process.