Ripple’s Victory, A Win For Coinbase, JPMorgan Says

Ripple, the company behind XRP, prevailed in its legal battle against the United States Securities and Exchange Commission (SEC) in the past week, causing the cryptocurrency industry to experience a surge of enthusiasm. The SEC had filed a lawsuit against Ripple, accusing the payments and technology company of selling security-like XRP tokens to investors.

Judge Annalisa Torres ruled in Ripple’s favor, declaring that XRP is not a security when sold to the public. According to JPMorgan analysts, this recent court judgment appears to also be a win for Coinbase in its recent lawsuit by the SEC. 

JPMorgan Sees Ripple’s Win As Positive, But Coinbase Still Faces Challenges

In a JPMorgan research note, equity analysts – led by Kenneth Worthington – claim that Ripple’s victory against the SEC might be a win for Coinbase. On June 6, 2023, the SEC filed a lawsuit against Coinbase, alleging that the exchange had been “operating as an unregistered securities exchange”.

The SEC claims that the exchange acted as a middleman for the trading of 13 crypto assets, such as Cardano, Polygon, and Solana, which should have been registered as securities. However, the regulator’s stance appears to be shaky following the recent XRP ruling.

“If the Ripple case stands, it would appear more challenging for the SEC to demonstrate the 13 [tokens] are securities and that Coinbase is an unregistered securities exchange thus excusing it from certain future licensing and regulatory requirements,” the JPMorgan analysts said.

The analysts believe that Ripple’s victory doesn’t completely rule out the SEC’s case against Coinbase. This is because the crypto exchange was also sued for failing to register the offer and sale of unregistered securities via its “staking-as-a-service” program, they said.

“Furthermore, the SEC can appeal the Ripple decision furthering the uncertainty of the implications of the Ripple judgment,” the JPMorgan analysts added.

Ripple CEO: A SEC Appeal May Take Years 

In a Bloomberg interview, Ripple CEO Brad Garlinghouse made statements that suggested that it might take a while before the SEC can appeal the latest court ruling.

“As a matter of law, the law of the land right now is that XRP is not a security. Until there is an opportunity for the SEC to file an appeal, which would take years, frankly, we are very optimistic,” the Ripple executive said.

In this interview, Garlinghouse also directly criticized the SEC’s tactics against the crypto industry, calling the financial regulator a “bully”. He claims that the commission intentionally increases confusion in order to further empower itself against the crypto industry.