Coinbase, the famed US-based crypto exchange, saw its share prices rocket by over 24% on Thursday. This sudden rise came in the wake of the U.S. District Court ruling that Ripple Labs’ XRP token does not fall under the category of security. However, financial experts at the investment bank Berenberg caution that the jubilant response from investors might be overblown.
Investor Enthusiasm: The Driving Force
This remarkable price leap can be traced back to the interpretation of Judge Torres’ ruling as a contradiction to the SEC’s allegations against Coinbase earlier in June.
Many investors were left with the impression that the tokens purchased and traded on Coinbase’s platform in secondary-market transactions were not unregistered securities.
This interpretation sparked a considerable uptick in investor interest, which can be linked to the substantial price surge, according to a team spearheaded by financial analyst Mark Palmer.
Yet, Berenberg’s in-depth analysis reveals that this ruling doesn’t negate the SEC’s assertions. The judgment pertained primarily to Ripple’s primary market transactions of XRP and not to the secondary-market transactions, which Coinbase facilitates on its platform.
Berenberg’s Take on the Ruling’s Impact on Coinbase
In the context of Coinbase’s business model, the court’s decision that XRP isn’t a security might not carry much relevance. The verdict, while emphasizing that XRP, as a standalone entity, is not a security, also acknowledged that XRP sales could equate to securities transactions. This distinction is pivotal to Coinbase, which engages primarily in secondary-market transactions on its platform.
Even though the ruling pertains to one case and one judge, it could potentially undermine the SEC’s claims in similar instances. This development might cause the SEC to rethink their allegations like those leveled against Coinbase.
Coinbase: Bracing for the Legal Showdown
On another note, Coinbase is readying itself for its impending courtroom clash with the SEC. Last month, the watchdog charged the crypto-exchange with operating without the necessary registrations and allegedly facilitating the sale of unregistered securities through its staking services. With the first pre-trial hearing having taken place earlier today, the crypto community will be looking forward to how this will unfold.
