Unhappy customer files a complaint against Coinbase over XRP
Another complaint has been made about XRP.
The complainant claims Coinbase owes him commissions because the platform knowingly sold a security.
This topic enters controversial legal territory and needs to be watched closely.
A Coinbase customer filed a collective complaint alleging that the exchange should have known that XRP was a security. What does he hope to gain for himself and for all Coinbase customers?
Coinbase: new trial for XRP
Client Thomas Sandoval hopes to recoup some of his losses from XRP by suing Coinbase. Since Ripple Labs announced it was being sued by the US government, the token’s price has fallen.
For their part, major exchanges, including Bittrex , have said they will remove XRP from their rating shortly thereafter. Coinbase similarly announced that the platform would stop trading in XRP on January 19, 2021. Presumably, it feared hostile reactions if the lawsuit ended with a judgment against Ripple.
New Trial in California Federal Court on Single Count Alleges Coinbase Violated State Unfair Competition Laws by Selling XRP, Reportedly Unregistered Security, and Charging Commissions on sale.
The original lawsuit alleges that XRP is a security under US law. This would mean that the Securities and Exchange Commission (SEC) has not legally approved the token’s sale and trading.
The lawsuit involves two executives of the Ripple company and claims they knowingly illegally sold more than $ 1.3 billion worth of securities. The SEC said:
Ripple engaged in this illegal offering of securities from 2013 to present, although the company received legal advice as early as 2012 that under certain circumstances XRP could be considered a […] security under the federal securities laws.
Mr Sandoval takes this idea a little further. Its lawsuit, filed in federal court, argues that Coinbase’s negligence should result in reimbursement of its trading fees .
Logic dictates that Coinbase is responsible for negligence in selling XRP, an unlicensed security in this scenario. Therefore, the commissions that Coinbase charged for the illegal sale should be returned to the customer.
Reimbursement of commissions for all?
In Sandoval’s complaint , the case against Coinbase is built on a technicality. The crypto was a security, which Coinbase should have known, as it understood that the nodes of XRP were under Ripple’s control.
As the company owned the nodes, the nodes were therefore part of Ripple and therefore not a commodity, according to the lawsuit.
This is a particularly interesting argument , given XRP’s reputation for being centralized and “in favor of the banks”. XRP is meant to be a money transfer vehicle (which by definition probably makes it a currency).
Cryptophiles nevertheless blamed it for being centralized, unlike Bitcoin (although most of the BTC mines are in China) or Ethereum .