XRP enthusiast and Australian lawyer Bill Morgan believes that the delisting or halting of XRP trading by cryptocurrency exchange Coinbase could compromise its fair notice protections against the SEC requirements.
Last week, Coinbase formally responded to the SEC’s Wells announcement. The Wells notice indicates that the SEC will take enforcement action for potential violations of securities laws.
Morgan noted that in response to Coinbase’s Wells announcement, the exchange expects to use fair notice protections in the event of being sued.
He added that Coinbase believes it has stronger fair notice protections than the other defendants, even subtitled Ripple’s fair notice protections.
While this may seem like a good thing, Morgan claims that Coinbase ran into problems as it delisted XRP in January 2021, shortly after the SEC filed a lawsuit against Ripple.
This may indicate that Coinbase has given the matter some thought and decided to stop trading XRP. He believes this made Coinbase realize that its XRP listing process could be considered a securities listing.
Morgan believes that Coinbase should maintain its stance of not listing securities and not delisting any tokens.
The exchange should have argued that none of the secondary market transactions on its exchange constituted a sale of securities, and that the SEC simply sued Ripple over its sale.
However, Morgan believes that Coinbase’s fair notice protections after January 2021 are no stronger than when Ripple was sued in December 2020.
He emphasized that, in hindsight, delisting XRP was a tactical mistake. In Morgan’s view, Coinbase’s fair notice defense until January 2021, before it delists XRP, is more likely to rival Ripple.
The response to the Wells announcement makes a solid point in this regard. According to Coinbase, the U.S. Securities and Exchange Commission announced on December 7, 2020 that there is uncertainty about the status of cryptocurrencies (except ether and bitcoin) as securities.
“Ripple may have relied on this evidence, but I’m not sure it did.”
However, in Morgan’s view, this is relevant because Coinbase was informed on Dec. 7, 2020, that the cryptocurrencies it offered, including XRP, were questionable, just weeks before Ripple was sued.
- Coinbase Stock Responds to Wells Announcement, Challenges SEC
- Coinbase Files Lawsuit With SEC Over Crypto Regulatory Clarity
According to USA Today