Why Relisting Ripple XRP Makes Too Much Sense to Ignore!

A video posted by the Cryptocurrency News Channel discusses the controversy surrounding Coinbase’s delisting of XRP and whether it should be relisted. The video explains that Coinbase has a process of identifying whether a cryptocurrency is a security, and this involves the SEC. The video references two recent cases involving Coinbase – one where allegations that Coinbase was letting customers transact securities were dismissed, and another where it was found that the company didn’t hold title to digital assets that were bought and sold on its exchange. The video also mentions a recent case involving Library where secondary sales of its cryptocurrency were deemed non-securities, potentially providing a precedent for other cryptocurrencies.

Coinbase’s Decision to Not Relist XRP: Examining the Legal Basis

Over the last couple of hours, I’ve been thinking, hypothesizing, and going through many different scenarios, trying to find a reality that justifies Coinbase not relisting XRP. Yes, you heard me right – Coinbase not listing XRP is by far one of the craziest things happening right now. In this article, we’ll examine the legal basis behind Coinbase’s decision.

Understanding Coinbase’s Listing Process

Coinbase has a process for identifying whether or not a cryptocurrency is a security, and it involves the SEC. The company only lists a coin after the SEC has given a soft thumbs up or after it has gone through their rigorous appeal process, which is looked over by the SEC.

Two Completed Cases

Not too long ago, there were two cases that are relevant to Coinbase’s decision to not relist XRP. The first case was between Coinbase and some people who basically alleged that Coinbase was letting them transact securities. The second case was between the SEC and Library, a cryptocurrency company.

Now both of these cases have finished. Coinbase’s lawsuit with the people is over, and the Library case is over. Let’s take a closer look at Coinbase’s case to get some perspective into everything.

The Coinbase Lawsuit

The proposed class action suit filed in New York basically seeks damages arising from the sale or soliciting of 79 digital assets that consumers say amounts to illegal contracts because the platform is not registered with the US SEC. The district judge Mr. Engelmeyer didn’t make a determination about whether digital tokens were actually securities.

Unfortunately, he did assume they were for the purposes of the dismissal request by Coinbase. If the suit had been allowed to proceed, the question of whether they are securities would have been central. Engelmeyer said that the terms of Coinbase’s user agreement flatly contradict allegations in the lawsuit that the company holds title to the digital assets that are bought and sold on the exchange.

The judge also found that the platform didn’t actively solicit investments. The suit alleges that Coinbase promoted the sale of the tokens by providing users with descriptions and their purported value, participating in promotions, giving news updates about crypto price movements, and links to web stories.

But Engelmeyer said those activities are a piece with the marketing efforts, materials, and services that courts have determined are not active solicitation. This is similar to what happened in a case last April with Binance, the world’s largest crypto exchange.

Applying the Law to XRP

XRP’s initial status is one thing in Ripple’s lawsuit with the SEC, and it ends because since the SEC didn’t go for a preliminary injunction, they didn’t stop Ripple’s business activities. They didn’t include any XRP action after December 22, 2020. That has been left out.

Coinbase does not have to hold XRP, but more importantly, they do not have to buy directly from Ripple. Meaning that it’s not by that definition a security by the company that’s being sued for it. Coinbase could buy it off a second party secondary market sales, or more importantly, they could let transactions from other parties proceed where they only facilitate the transfer and do not actually sell the coin.

There’s an argument that this would still put them in the wrong, but then there comes the most important part that happened a few days ago with Library. The secondary sales of a library coin were deemed non-securities, and this will extrapolate further to say that most cryptocurrencies out there are not securities if they are transacted with another person.

In conclusion, while Coinbase’s decision to not relist XRP seems baffling, understanding their legal basis can shed light on this matter. As crypto regulations continue to evolve, it will be interesting to see how Coinbase and other exchanges navigate legal gray areas.

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