Ripple (XRP) Encounters Fresh Legal Issues, This Time Not with the SEC: Here’s What You Need to Know

Summary

• The Oregon Attorney General named Ripple’s token in a lawsuit against Coinbase.
• Legal analysts, including Bill Morgan, deemed this action unwarranted and disconnected from prior legal decisions.

New Legal Challenge for XRP

Ripple frequently attracts media attention, but often not for reasons that advocates appreciate. Recently, the company’s token for cross-border transactions was brought up in a lawsuit filed by the Attorney General of Oregon against the cryptocurrency exchange, Coinbase.

The state’s chief legal officer alleges that various cryptocurrencies, including XRP, SOL, ADA, LINK, and UNI, have been marketed and sold as investment contracts. The lawsuit categorizes these assets as “crypto securities.”

This legal action from the Oregon AG has garnered considerable attention and concern within the crypto community. Notably, Bill Morgan, a legal expert recognized for his thorough evaluations of Ripple’s legal issues, openly criticized the move.

He pointed out that the Oregon AG seemingly disregarded the fact that Coinbase removed XRP from trading on its platform back in December 2020, following the SEC’s lawsuit against Ripple. The exchange reinstated trading for this asset in mid-2023 after a court determined that secondary sales of XRP do not equate to investment contracts.

“No one could have the imagination to make up this dystopian nonsense,” he remarked.

It is noteworthy that Coinbase has faced similar scrutiny from the SEC previously. Almost two years prior, the SEC filed an extensive lawsuit against the exchange, alleging violations of securities laws for allowing certain cryptocurrencies deemed to meet the Howey Test criteria to be traded.

Among the various cryptocurrencies labelled as securities in that case were SOL, ADA, and MATIC, while XRP was not included. Over recent months, the SEC has notably softened its aggressive stance toward the crypto sector, settling numerous legal disputes with various digital asset firms. The case against Coinbase is one of those that has been resolved, but the more prominent case involving Ripple is still pending a formal conclusion.

Recent Developments in Ripple’s Case Against the SEC

Recently, Ripple’s CEO, Brad Garlinghouse, celebrated a significant victory, announcing that the SEC intended to retract its most recent appeal, indicating a potential end to the ongoing lawsuit. This was later confirmed by the company’s chief legal officer, Stuart Alderoty.

The Ripple community rejoiced at what they perceived to be the conclusion of a prolonged legal battle that has spanned over four years. However, more legal steps are required before this case can be considered completely resolved.

Earlier this month, both Ripple and the SEC submitted a joint request to pause their respective appeals. Shortly thereafter, the US Court of Appeals for the Second Circuit recognized and accepted this motion.

While this progression brings the case closer to resolution, the securities regulator has yet to provide an official announcement. In the meantime, attorney James Filan noted that the SEC has been instructed to submit a status update on its ongoing legal matters within 60 days following this latest ruling.

Although it may appear that the end of the lawsuit is imminent, analysts caution that its finalization is unlikely to affect XRP significantly, as the implications have already been factored into its current market valuation.