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With many crypto analysts speculating that the SEC v. Coinbase lawsuit could proceed to discovery, XRP community members are eager to see the emails between the parties regarding the decision to list and delist XRP.
The long-awaited hearing of Coinbase’s motion to dismiss the lawsuit filed by the United States Securities and Exchange has finally ended.
Notably, counsels from both sides appeared before New York District Judge Katherine Polk Failla yesterday to argue why the lawsuit should be dismissed or continued.
SEC v. Coinbase Lawsuit
For context, the SEC charged Coinbase in June with violating securities laws. Part of the SEC’s claims include the fact that 13 crypto assets listed on Coinbase constitute unregistered securities, including FIL, SAND, AXS, SOL, and ADA.
The regulator also deemed the exchange’s staking service as a security. Coinbase, on the other hand, is asking the judge to dismiss the lawsuit, claiming that the assets listed on its trading platform do not constitute securities as its users do not exchange any underlying investment contracts while trading.
The San Francisco-based exchange also filed the dismissal motion, citing the Major Questions Doctrine, which suggests that the SEC does not have Congress’ blessing to regulate a novel industry like crypto.
Coinbase CEO Reacts
Reacting, Coinbase’s chief legal officer Paul Grewal took to the X platform to react to the conclusion of yesterday’s hearing. He expressed confidence in the firm’s argument in the case while anticipating Congress’ intervention that could help provide clear rules for the crypto space.
Coinbase does not offer securities. We are confident in our legal arguments and look forward to a decision that will bring much needed clarity to the industry. 3/4
— paulgrewal.eth (@iampaulgrewal) January 17, 2024
Details of SEC v. Coinbase Dismissal Hearing
Commenting, prominent legal expert James Murphy (a.k.a MetaLawMan), who has closely followed the Coinbase lawsuit, stressed that the hearing ended without a knockout blow from both sides.
SEC v. @Coinbase Update V (last)
The long awaited hearing is over.
As expected, there was no ruling from the Judge.
There were no knockout blows delivered by either side and, frankly, not a lot of high points over the course of the 5 hour hearing.
The Judge was the star of…
— MetaLawMan (@MetaLawMan) January 17, 2024
The legal expert pointed out that Judge Failla’s expertise stood out throughout the five-hour hearing. According to him, the judge drafted 14 pages of questions for the hearing, showing that she has a good understanding of the technology and terminology.
As expected, the parties argued about the merits of Judge Jed Rakoff’s and Judge Analisa Torres’ decisions in the Terra and Ripple cases, respectively. It bears mentioning that both judges are in the same district as Judge Failla.
Meanwhile, MetaLawMan stated that there was a consensus at the hearing stating that cryptos themselves do not constitute securities. However, the SEC argued that trading crypto assets on secondary markets can still constitute a sale of investment contracts.
MetaLawMan, known for accurately predicting legal cases involving cryptos, cast doubt on the possibility of Judge Failla dismissing the SEC’s lawsuit based on the Major Questions Doctrine.
He speculated that the judge could allow the lawsuit to proceed to the discovery phase like the Ripple case. In general, he predicted that Coinbase would come out victorious in the end.
It is worth noting that other crypto influencers also share sentiments similar to those of MetaLawMan.
Will Coinbase and SEC Emails Regarding XRP Be Released in the Lawsuit?
With several crypto enthusiasts expecting the case to proceed to the discovery phase, an XRP community member, Ashley Prosper, pointed out that he would be interested in seeing the communication between the SEC and Coinbase regarding XRP.
#XRP #XRPCommunity
If the Coinbase case goes forward, I will be very interested in seeing the emails between the SEC and Coinbase regarding XRP. https://t.co/w1gOJBsPvp— Ashley PROSPER (@AshleyPROSPER1) January 17, 2024
Recall that Coinbase delisted XRP in early 2021, shortly after the SEC alleged that the coin is a security. Coinbase’s decision shook the crypto community, given that the exchange has always claimed that it follows a rigorous diligence process reviewed by the SEC to ensure that it does not list assets deemed as securities.
According to pro-XRP lawyer Bill Morgan, Coinbase’s decision to list and delist XRP showed that the exchange’s rigorous process failed during the XRP listing process or that the exchange delisted XRP despite knowing it does not constitute security to please the SEC.
If your process is so rigorous why did you list then delist XRP. One decision must be wrong. Either your rigorous process failed and you listed a “security” or you cynically delisted a crypto you knew was not a security to appease the SEC. Which one is it? /1 https://t.co/UZGP226hKy
— bill morgan (@Belisarius2020) July 26, 2022
Interestingly, he noted that the SEC and Coinbase communication regarding XRP would be among the documents the regulator would want to protect, just like the Hinman speech.
The Hinman speech document was released in the Ripple case after over 18 months of intense legal tussle. Whether the regulator would fight to protect its communication with Coinbase regarding XRP remains to be seen if the case eventually proceeds to discovery.