Polygon CLO Says Coinbase vs. SEC Case Is Very Far From the Decision

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Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs, has shared insights about recent actions by the U.S. Securities and Exchange Commission (SEC) and their implications for the industry.

Last month, Judge Analisa Torres ruled that institutional XRP sales were deemed securities transactions, excluding secondary market sales. She clarified that XRP itself did not violate securities laws. The SEC intends to challenge this decision, emphasizing that different courts might hold varying perspectives.

During a recent podcast, Rebecca explained, “Both the Ripple and Coinbase motions for judgment on the pleadings aim to emphasize a return to legal fundamentals. The situation may appear novel, but it diverges from existing paradigms. Therefore, we cannot simply import notions of implied contracts into the definition of an investment contract.”

In June, the SEC filed a lawsuit against Coinbase, alleging the exchange’s violation of securities laws. The SEC accused Coinbase of functioning as a broker, exchange, and clearing agency for specific cryptocurrencies categorized as securities. This list included 13 tokens.

Discussing the Coinbase case, Rebecca noted, “The briefing stage is ongoing for Coinbase’s case. Given its high profile, the industry will contribute significantly. A verdict is distant, as extensive discovery and briefings lie ahead—assuming the case progresses.”

She further remarked, “The judge overseeing the Coinbase case exhibited skepticism towards the SEC. She questioned whether the SEC had previously greenlit this particular case, allowing for an IPO.”

In the SEC vs. Ripple legal showdown, key stakeholders have informed Judge Analisa Torres about their availability for the trial. Representatives from both the SEC and Ripple are coordinating for the trial, set for the second quarter of 2024.