"The challenges facing Binance will repeat the difficult path that Ripple faced in the past three years"

U.S. District Judge Katherine Polk Failla has rejected Coinbase’s motion to dismiss a lawsuit filed last year by the U.S. Securities and Exchange Commission (SEC). Now, Coinbase faces a multi-year legal battle similar to that of Ripple.

U.S. District Judge Katherine Polk Failla has rejected Coinbase’s motion to dismiss charges filed last year by the U.S. Securities and Exchange Commission (SEC).

Court denies most of Coinbase's motion

In a landmark ruling issued yesterday, a judge denied most of Coinbase’s motions to appeal the charges brought by the SEC last year. The court found that the securities agency had made reasonable allegations against the San Francisco-based institution.

According to Judge Failla, the SEC has sufficiently charged Coinbase with operating as an unregistered broker-dealer, exchange, and clearinghouse under the U.S. federal securities laws.

The judge also said Coinbase facilitated trading in unregistered securities through its coin lock program. However, Coinbase won a partial victory in its lawsuit against the SEC, with the court dismissing the regulator’s charges against Coinbase Wallet.

Coinbase faces lengthy legal battle similar to Ripple’s

The SEC’s lawsuit against Coinbase will enter the discovery phase following a recent ruling, and a prominent cryptocurrency lawyer said Coinbase could also suffer a similar fate as Ripple.

In particular, cryptocurrency lawyers including Bill Morgan have said exchanges could experience the same fate as Ripple’s three-and-a-half-year battle against the SEC.

To recap, in December 2020, the SEC charged Ripple with violating federal securities laws by selling XRP, a crypto asset labeled as a security.

As with Coinbase, Judge Analisa Torres denied Ripple’s motion to dismiss the SEC’s charges at an early stage, and the litigation is still ongoing. While Ripple’s earlier motion to dismiss the SEC’s charges was denied, the crypto payments company scored a major victory against the regulator in a summary judgment.

After years of debate, the court ruled that Ripple did not violate the law by selling XRP on digital exchanges. The court also sided with Ripple on other distribution issues, finding that the transactions did not constitute an investment contract.

However, Judge Torres sided with the SEC regarding Ripple’s past sales of XRP to institutions.

So far, Ripple’s lawsuit has gone through the discovery phase and summary judgment phase and has lasted for more than three years.

Currently, the case is in the remediation phase, and the SEC has submitted its opening statement for the trial argument. It is worth noting that Ripple will submit its objections to the statement by April 22, while the SEC will have the opportunity to submit its response by May 6.

Crypto enthusiasts expect Coinbase lawsuit to enter discovery phase

Meanwhile, top cryptocurrency enthusiasts are not surprised that the SEC’s lawsuit against Coinbase will enter the discovery phase. One of them is pro-cryptocurrency journalist Eleanor Terrett.

The reporter said the SEC did not need to have a strong argument to convince the judge to reject Coinbase’s motion to dismiss.

“It would be very surprising if Judge Failla did not find at least one plausible argument in the several charges brought against Coinbase,” Terrett said.

However, she stressed that Coinbase will now have the opportunity to prove its case in court, just like Ripple did.

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