Despite Ripple’s recent victory in its lawsuit with the US Securities and Exchange Commission (SEC), there are concerns within the community that the legal battle has had a negative impact on the adoption of XRP. John Deaton, a lawyer and founder of CryptoLaw, who also represents thousands of XRP holders, believes that the SEC lawsuit has hindered the potential mass adoption of XRP over the past three years.
In a recent thread on X (formerly Twitter), Deaton highlighted the level of adoption XRP had achieved before the SEC lawsuit, suggesting that the token may have experienced even greater adoption if the regulator had not filed charges. He specifically mentioned major crypto exchange Coinbase and money transfer giant MoneyGram as significant adopters of XRP for cross-border payments.
Deaton focused on Coinbase’s promotion of XRP and the regulatory steps taken by the exchange before listing Ripple’s native token on its platform. According to Deaton, Coinbase met with the SEC in 2019 and conducted a thorough assessment, concluding that XRP was not a security. The exchange sought the SEC’s confirmation and compliance with securities laws. The SEC neither refuted Coinbase’s evaluation nor discouraged the exchange, leading to the listing of XRP on its platform. As a result, tens of thousands of US residents purchased XRP following Coinbase’s promotion.
However, the situation changed in December 2020 when the SEC sued Ripple for selling unregistered securities worth $1.3 billion. This led to companies like Coinbase delisting XRP from their platforms, along with several other exchanges. MoneyGram, which had previously partnered with Ripple to use XRP for cross-border payments, terminated the partnership agreement shortly after the SEC lawsuit, with Ripple stating that it was a joint decision.
While Ripple ultimately won the lawsuit with the recent ruling declaring XRP as not a security, Deaton believes that the legal battle has had a detrimental effect on XRP’s adoption and may have hindered major developments over the past three years. He questioned whether Coinbase would have invested in Ripple if the lawsuit had never occurred.
Although Coinbase relisted XRP after the ruling, MoneyGram did not renew its partnership with Ripple. Instead, the company formed a new relationship with Ripple’s competitor, Stellar Development Foundation (SDF), in October 2021 to enable transfers with the USDC stablecoin. In August 2023, SDF acquired a minority stake in MoneyGram.
The impact of the SEC lawsuit on XRP’s adoption remains a topic of discussion within the crypto community. While Ripple has achieved a legal victory, the long-term consequences of the legal battle are still being assessed.