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SEC Lawsuits Against Binance and Coinbase Spark Crypto Industry Debate

Analyzing the SEC's legal actions against Binance and Coinbase and the implications for XRP holders and the broader crypto market.
Published on 2023-06-09

SEC's Lawsuits Shake Crypto Giants

The United States Securities and Exchange Commission (SEC) has initiated legal proceedings against two major cryptocurrency exchanges, Binance and Coinbase. This legal move has sent ripples through the crypto community, prompting reactions from various stakeholders.

XRP Holders' Stance and Legal Perspectives

XRP holder attorney and CryptoLaw founder, John Deaton, highlighted the filing of an amicus brief on behalf of 75,000 XRP holders in the ongoing Ripple lawsuit. The brief took a neutral stance, neither supporting nor opposing Ripple's alleged securities law violations. Deaton emphasized that XRP, like Bitcoin (BTC) and Ethereum (ETH), is a digital code and not inherently a security. Moreover, he clarified that secondary market sales should not fall under securities violations.

The Secondary Market Sales Debate

The discussion around secondary market sales caught the attention of crypto enthusiast and billionaire Mark Cuban. Cuban proposed a simple test to determine if such sales classify as securities. His suggested "Bahamas Test" posits that if a token can continue to exist independently of its originating organization, it should not be considered a security. Deaton agreed with this perspective, supporting the argument that the token's ability to survive independently is crucial.

Impact on Binance.US

In the wake of these legal challenges, Binance.US announced the suspension of USD deposits. The platform informed its users that its banking partners are set to halt fiat (USD) withdrawal capabilities soon, with changes expected by June 13.

The SEC's actions against Binance and Coinbase have reignited discussions on regulatory frameworks within the crypto industry, emphasizing the need for clear guidelines to navigate the evolving landscape.

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