Legal experts specializing in digital assets are highlighting the far-reaching implications that the SEC and Ripple case could have for the entire sector moving forward.
Despite initial outrage surrounding the lawsuits against Binance and Coinbase, leaders in the crypto industry are now viewing them as an opportunity to establish clear regulations and guidelines.
The digital asset community closely follows these cases, supporting both exchanges while criticizing SEC Chair Gensler and the SEC.
The ongoing litigation between the SEC and Ripple, initiated in December 2020, is gaining momentum as a potentially favorable ruling could set a precedent for countless industry victories.
Experts in Web3 law have drawn a close connection between the Ripple case and the recent SEC lawsuit against Binance and Coinbase. The trial judge's decision on whether XRP is considered a security in the secondary market could greatly influence future legal determinations.
James Murphy, a crypto lawyer, expressed on social media that a win for Ripple could significantly undermine the SEC's entire case against the accused exchanges, which allegedly provided trading services for unregistered securities. However, he noted that while it would serve as a persuasive precedent, it would not carry legal binding.
This implies that the courts handling the Coinbase and Binance cases would not be obligated to rule similarly, as only the Supreme Court of Appeal can establish binding precedents. Nevertheless, Murphy believes that the court would closely monitor the Ripple case due to its similarity and jurisdiction overlap in lower Manhattan.
Similarly, Bill Morgan, a partner at Morgan Mac Lawyers, emphasized that the judgment, in this case, could be a game-changer for both the industry and the SEC, depending on the outcome.
"If the Ripple case results in a significant loss for the SEC, it would proceed with the Coinbase and Binance lawsuits with a substantial disadvantage. Naturally, Coinbase and Binance would leverage this outcome to argue that the sale of XRP does not constitute an investment contract," he added.
There are also allegations of political motives at play.
Since SEC Chair Gary Gensler launched a renewed offensive against the digital asset market, crypto users and industry players have accused the Commission of displaying bias towards specific assets and markets. Pro-XRP lawyer John Deaton believes that the case involving XRP and the two exchanges is intertwined, leading the SEC to file these lawsuits at this particular time.
"I believe the SEC wanted to file these cases before the court's decision, just in case it turns out to be unfavorable for them, potentially causing a loss of political and legal momentum," he explained.
Deaton further asserted that the Commission would likely ease its aggressive stance towards cryptocurrency firms once major financial institutions acquire more significant stakes in digital assets.
"Once JPMorgan, Goldman Sachs, or other traditional players have a larger share of the crypto market, the SEC will adopt a more reasonable approach," he added.