A cryptocurrency developer's landmark legal victory against the U.S. Securities and Exchange Commission (SEC) will galvanize Coinbase and other companies to resist the agency's attempt to assert its jurisdiction over the industry, experts said.
Thursday's ruling that Ripple Labs Inc did not violate securities law by selling its XRP token on exchanges was the first major setback for the SEC in a decade of enforcement against the cryptocurrency industry. Other crypto firms accused of illegally operating digital asset exchanges are exploring ways to take advantage of the ruling, according to two sources familiar with the matter who asked not to be named because they were not authorized to speak publicly.
"This case will cause people to rethink, and I think it already has," said Robert Frenchman of Mukasey Frenchman LLP. U.S. District Judge Analisa Torres in New York on Thursday ruled its sales on public cryptocurrency exchanges were not offers of securities because purchasers did not have a reasonable expectation of profit that depended on Ripple's efforts, a key factor in determining if XRP was a security at the time. However, she also ruled Ripple's direct sales of XRP to investors should have been registered as securities, handing the SEC a partial victory.
Spokespeople for Coinbase and Bittrex did not respond immediately to requests for comment. Binance declined to comment, as did a spokesperson for the SEC.
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