The US Securities and Exchange Commission’s (SEC) legal battle with Ripple over the XRP token may have significantly shaped its course in the US market. Crypto lawyer John Deaton explained this in an X post (formerly known as Twitter) uploaded earlier today that sheds light on the fallout from the SEC’s lawsuit over the potential adoption of XRP in the US.
You could NEVER underestimate the damage the SEC’s lawsuit has done – NOT JUST AGAINST RIPPLE – BUT #XRP. THREE YEARS OF ADOPTION – that’s the cause.
How long is 3 years – in crypto years?
People seem to forget how much Coinbase has promoted #XRP for the lawsuit.… https://t.co/1fZ3r8WCSd pic.twitter.com/GLu4kFUU38
— John E Deaton (@JohnEDeaton1) August 22, 2023
The comments come as discussions about regulatory clarity in crypto are more intense than ever, with token holders strive for clearer guidelines in the North American country.
The Coinbase connection
According to Deathon, Coinbase, one of the pioneering cryptocurrency exchanges in the US, was at the forefront of promoting XRP before regulatory issues arose. Deaton pointed out that before launching XRP on the market, Coinbase proactively reached out to the SEC for clarity.
In at a January 2019 meeting, Coinbase presented its regulatory framework for evaluating digital assets — a framework that had previously won the admiration of senior SEC staff. With no objection from the SEC, Coinbase proceeded to list XRP the following month.
In fact, in January 2019, Coinbase asked and got a meeting with the @SECGov SPECIFICALLY TO DISCUSS THE REGULATORY STATUS OF #XRP!
Coinbase explained to the SEC that Coinbase had evaluated #XRP and has guided it through Coinbase’s strict digital asset regulatory framework.
— John E Deaton (@JohnEDeaton1) August 22, 2023
Moreover, the fact was not just limited to Coinbase. Payment processing giant MoneyGram, which had partnered with Ripple for money transfers, revealed its intentions to integrate with the XRP Ledger through a formal filing with the SEC.
Like the Coinbase body, MoneyGram also did not receive any complaint from the regulatory body, but the ensuing legal battle halted the company’s plans.
The controversial lawsuit and its implications for XRP
In contrast to these initial interactions, the SEC filed a lawsuit against Ripple in December 2020. Deaton stressed that several industry stakeholders, including the lawyers of MoneyGram and Coinbase, have reviewed XRP and determined it was not a security. Still, the SEC’s lawsuit against Ripple painted a contrasting story.
Amazingly, despite all of the above (and much more), on December 22, 2020, less than 2 years AFTER Coinbase met with the SEC regarding #XRPand 18 months AFTER MoneyGram’s disclosure to the SEC that it used #XRPand despite attorneys at the SEC failing to reach a conclusion #XRP was a security in…
— John E Deaton (@JohnEDeaton1) August 22, 2023
The next legal battle to emerge was felt across the crypto industry. It raised questions about the regulatory landscape and spawned discussions about the nature of cryptocurrencies and how they are classified in the US.
While Ripple has enjoyed commendable success outside the US, Deaton underlined that the lawsuit undeniably hampered XRP adoption in the country.
From Deaton’s perspective, the evidence gathered over the past three years suggested the lawsuit may have been part of a strategy. While it remains speculative to pinpoint the exact motivations behind the SEC’s actions, the impact on XRP adoption in the US and the wider crypto market is palpable.
Deaton concluded:
It is so clear that the lawsuit has been used as a weapon. I said it just 9 days after the Ripple lawsuit in a federal plea, when I filed the Writ of Mandamus against the SEC, and all the evidence uncovered over the last 3 years proves it to be true.
Featured image of Unsplash, chart from TradingView