The US Securities and Exchange Commission’s (SEC) legal tussle with Ripple over the XRP token may have significantly set its trajectory back in the US market. Crypto lawyer John Deaton explained this in an X (formerly known as Twiter) post uploaded earlier today, shedding light on the ramifications of the SEC’s lawsuit on XRP’s potential adoption in the US.
You could NEVER underestimate the damage the SEC’s lawsuit has caused – NOT ONLY AGAINST RIPPLE – BUT #XRP. THREE YEARS OF ADOPTION – that’s what it’s caused.
Just how long is 3 yrs – in crypto years?
People seem to forget how much Coinbase promoted #XRP before the lawsuit.… https://t.co/1fZ3r8WCSd pic.twitter.com/GLu4kFUU38
— John E Deaton (@JohnEDeaton1) August 22, 2023
The comments come when discussions about regulatory clarity in crypto are more intense than ever, with token holders striving for clearer guidelines in the North American country.
The Coinbase Connection
According to Deaton, Coinbase, one of the pioneering cryptocurrency exchanges in the US, was at the forefront of promoting XRP before regulatory challenges arose. Deaton pointed out that before listing XRP, Coinbase proactively reached out to the SEC for clarity.
In a meeting held in January 2019, Coinbase presented its regulatory framework for evaluating digital assets – a framework that had previously garnered admiration from senior SEC staff. With no objections raised by the SEC, Coinbase proceeded to list XRP the following month.
In fact, in January 2019 Coinbase asked for and got a meeting with the @SECGov to SPECIFICALLY DISCUSS THE REGULATORY STATUS OF #XRP!
Coinbase explained to the SEC that Coinbase had evaluated #XRP and ran it through Coinbase’s stringent regulatory framework for digital assets.
— John E Deaton (@JohnEDeaton1) August 22, 2023
Furthermore, the fact wasn’t just restricted to Coinbase. Payment processing giant MoneyGram, which had established a partnership with Ripple for remittances, disclosed its intentions to integrate with the XRP Ledger through a formal filing with the SEC.
Much like the Coinbase instance, MoneyGram didn’t receive any complaint from the regulatory body either, but the ensuing legal battle halted the company’s plans.
The Controversial Lawsuit And Its Implications For XRP
Contrary to these initial interactions, the SEC filed a lawsuit against Ripple in December 2020. Deaton emphasized that several industry stakeholders, including the lawyers at MoneyGram and Coinbase, assessed XRP and determined it was not a security. Yet, the SEC’s lawsuit against Ripple painted a contrasting narrative.
Amazingly, despite all the above (and so much more), on December 22, 2020, less than 2 years AFTER Coinbase met with the SEC about #XRP, and 18 months AFTER MoneyGram disclosed to the SEC it was utilizing #XRP, and despite lawyers at the SEC not concluding #XRP was a security in…
— John E Deaton (@JohnEDeaton1) August 22, 2023
The following legal battle created was felt across the crypto industry. It raised questions about the regulatory landscape and brought forth discussions about the nature of cryptocurrencies and how they are classified in the US.
While Ripple has seen commendable success outside the US, Deaton underscored that the lawsuit undeniably hindered XRP’s adoption within the country.
From Deaton’s perspective, the evidence gathered over the past three years suggested that the lawsuit may have been part of a strategy. While it remains speculative to conclude the exact motivations behind the SEC’s actions, the impact on XRP’s US adoption and the broader crypto market has been palpable.
Deaton concluded:
It is so clear the lawsuit was used as a weapon. I said it only 9 days after the Ripple lawsuit in a federal pleading, when I filed the Writ of Mandamus against the SEC, and all the evidence uncovered during the last 3 years proves it to be true.
Featured image from Unsplash, Chart from TradingView