Coinbase Shares Gain After Court Limits SEC Award in Ripple Case
Shares of Coinbase Inc. climbed following a court decision that ordered Ripple Labs Inc. to pay significantly less than the amount the US Securities and Exchange Commission (SEC) had demanded in a lawsuit. This ruling is considered favorable for Coinbase, the largest cryptocurrency exchange in the U.S., in its ongoing legal battle with the SEC. Coinbase’s stock price increased by approximately 7%, reaching about $191, following a court verdict on Wednesday. The court mandated Ripple to pay a fine of $125 million, a significant reduction from the nearly $2 billion the SEC had sought, accusing Ripple of illegally raising funds without registering its digital token as a security in 2020.
According to Bloomberg Intelligence analyst Elliot Stein, this unexpectedly positive result could enhance the likelihood of a favorable ruling for Coinbase, as noted in his analysis. Stein highlighted that the central concern is the extent of the SEC’s regulatory authority over transactions involving digital assets. Coinbase is potentially facing up to $4 billion in fines. The SEC has alleged that the exchange acted as an unregistered securities exchange through its staking-as-a-service program. This program enables cryptocurrency holders to earn rewards by holding certain types of tokens.
Stein estimated that Coinbase has a 60% probability of prevailing in its legal proceedings. Moreover, the favorable outcome in the Ripple case could result in reduced penalties for Coinbase even if it were to lose. Following the court's decision, Ripple's XRP token surged by up to 25%, reaching 64 cents, but it slightly fell to about 61 cents by Thursday. Concurrently, Bitcoin experienced an 8% increase in value, approaching $60,000.
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