Coinbase Decision to Delist XRP Weakens its Wells Notice Argument, Says Top Lawyer

Attorney Morgan faults Coinbase’s response to SEC Wells Notice.

Bill Morgan, an Australian-based pro-XRP lawyer, has joined other crypto community members to react to news of Coinbase’s response to last month’s Wells Notice from the United States Securities and Exchange Commission.

Coinbase Responds to SEC’s Wells Notice

For context, the San Francisco-based crypto exchange Coinbase on Thursday offered a fiery response to the SEC’s Wells Notice. The exchange argued that it does not facilitate the trading of any crypto asset that constitutes securities. It further urged the SEC not to pursue enforcement actions against the company.

Furthermore, Coinbase noted that if the SEC believed it violated securities law, the agency would not have allowed it to become a publicly-traded company in 2021.

Attorney Morgan Says Coinbase Listing Criteria Is Flawed

Meanwhile, attorney Morgan was not pleased with the exchange’s assertion of using a “robust process based on SEC guidance” to ensure it does not support crypto assets that constitute a security.

According to Morgan, Coinbase’s assertion about its listing criteria is flawed by the exchange’s decision to list, delist, and not relist XRP for trading. Recall that Coinbase, which added support for XRP trading in 2019, delisted the coin in January 2021, a month after the SEC charged Ripple and two of its execs with violating securities laws. The exchange had since ignored calls from XRP community members to relist the coin for trading.

In a recent tweet, Morgan said Coinbase needs to explain “what happened with XRP” if the exchange is confident that its listing criteria are perfect and no securities were listed along the line.

He rephrased one of Coinbase’s arguments by referencing Ripple and XRP.

“Even if Ripple was engaged in ongoing marketing efforts at the time of each XRP transaction on Coinbase, and even if those ongoing marketing efforts were sufficient to establish an implicit investment contract, it does not follow that Secondary market XRP transactions implicate the investment contract. To the contrary, the secondary market XRP transactions on Coinbase fail all four of the Howey prongs,” Morgan noted.

The pro-XRP lawyer asserted that Coinbase’s submission is completely untrue or that the exchange’s submission to ignore the reasoning of its Wells Notice response about Ripple and XRP is arbitrary & unexplained.

“Bottom line Brian and Paul either know XRP traded on Coinbase is not a security, or they know other cryptos on Coinbase are securities. Can’t have it both ways when you make such a submission in your Wells notice response,” he added.

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