Coinbase shares skyrocketed 24% at Thursday's closing bell on Wall Street following news that Ripple Labs scored a win in a closely followed case against the United States Securities and Exchange Commission (SEC).
Yesterday, a U.S. District Judge ruled that the XRP crypto token is "not a security," effectively allowing Coinbase to relist trading for XRP on its exchange platform. The judge explained that Ripple Labs didn't violate federal securities law by selling its XRP token on public exchanges.
Coinbase will re-enable trading for XRP (XRP) on the XRP network. Do not send this asset over other networks or your funds may be lost. Transfers for this asset remain available on @Coinbase & @CoinbaseExch in the regions where trading is supported.
— Coinbase Assets 🛡️ (@CoinbaseAssets) July 13, 2023
In December 2020, the SEC claimed that Ripple, the company behind the blockchain and the creator of the XRP cryptocurrency token, made $1.3 billion in 2013 through the sale of XRP to investors in an unregistered security offering.
Commenting on crypto regulations, Ripple Labs CEO Brad Garlinghouse said at the time that the industry "lacked clarity and certainty," which hampered its growth.
This week's ruling marks a significant milestone as it is the first instance where a judge concluded that a crypto token wasn't considered a security by the SEC, sparking optimism for the market's future.
Coinbase's stock jumped 24% to $107 apiece at the end of the session in New York, with Ethereum surpassing the $2,000 mark to trade for $2,008.10 at 3:03 a.m. ET on Friday. The XRP token surged about 74% following the court’s decision.
SEC Scrutiny Over Crypto Tightens
Coinbase has also faced a lawsuit from the SEC for allegedly violating US securities law in early June. The SEC sued Coinbase, accusing them of acting as an exchange, broker, and clearing agency without registering.
According to the SEC's lawsuit, Coinbase allegedly facilitated the trading of crypto asset securities unlawfully since 2019, resulting in the deprivation of investor protections.
The company has also faced a lawsuit for its failure to register its staking program, which enables customers to earn profits from certain blockchain mechanisms.
Similarly, the SEC filed 13 charges against cryptocurrency exchange Binance and its CEO, Changpeng Zhao (CZ). The complaint claimed that Binance mishandled customer funds and deceived regulators and investors by covertly transferring billions of dollars to a separate company controlled by CZ.
Additionally, Binance was accused of providing inadequate information to investors regarding its systems for detecting manipulative trading.
Commenting on the case, SEC Chair Gary Gensler stated that the charges indicated an extensive pattern of deception, conflicts of interest, lack of disclosure, and evasion of the law, involving misleading investors about risk controls and manipulating trading volumes while concealing the true operators of the platform.
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