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Fox Business journalist highlights three reasons why the SEC didn’t include XRP in the list of crypto assets it tagged as securities in the Binance case.
The United States Securities and Exchange Commission (SEC) sent shock waves into the market yesterday after it charged Binance and its founder Changpeng Zhao (CZ), with violating federal securities law.
Notably, the SEC alleged that the world’s largest exchange by 24-hour trading volume facilitated the trading of unregistered securities such as ADA, BNB, BUSD, MANA, SAND, FIL, COTI, AXS, ALGO, ATOM, MATIC, SOL.
However, the SEC did not include XRP in the list of assets it tagged as “securities.” This decision surprised many, who expected XRP to be on the list since the SEC had previously alleged the coin to be a security in its lawsuit against Ripple.
3 Reasons Why SEC Didn’t Mention XRP
Commenting on the development in a tweet yesterday, Fox Business journalist Eleanor Terrett highlighted three reasons why the SEC refused to include XRP among the list of assets tagged as securities in the Binance case.
Some questions as to why the @SECGov did not name $XRP as a security token in the @binance lawsuit. According to some of my legal sources it could be one or all of a couple of reasons:
1. The SEC wants to stay away from risking inconsistent decisions.
2. It's already being…— Eleanor Terrett (@EleanorTerrett) June 5, 2023
Terrett noted that she was informed by her “legal sources” that the SEC refused to include XRP in the list because the agency does not want to risk inconsistent decisions.
Secondly, the SEC did not list XRP as a security in the Binance lawsuit since the crypto asset is already being litigated in its legal battle against Ripple. Per Terrett, mentioning XRP as a security in the Binance lawsuit could open up a potential discovery issue.
Lastly, Terrett noted that if Ripple wins the ongoing legal battle, the ruling could weaken the agency’s case against Binance in the eyes of the public, press, and Congress.
It bears mentioning that the SEC has already tagged XRP as a security in the ongoing Ripple lawsuit. The SEC alleged in December 2020 that Ripple and two of its execs raised over $1.3 billion via their XRP sales, an asset the agency labels a security.
The case has lingered for more than two years, with most crypto enthusiasts expecting a summary judgment decision to come before the end of this month.
Significance of Ripple Lawsuit
Notably, the outcome of the Ripple lawsuit will have a significant impact on the United States cryptocurrency industry.
A positive outcome for Ripple could pave the way for regulatory clarity in the industry. However, if the blockchain company loses the lawsuit, industry leaders fear the SEC might continue its adverse enforcement actions against crypto-related businesses. The agency will also continue to tag more altcoins as securities.
For SEC Chair Gary Gensler, everything other than Bitcoin is a security. As the day goes by, the SEC and other regulators have continued to release names of cryptocurrency assets that could be classified as securities.
As reported earlier, New York Attorney General (NYAG) Letitia James alleges that Ethereum is a security in a lawsuit against KuCoin, adding that the second-largest cryptocurrency by market valuation passes the Howey test.