Ripple Labs Inc. Court Ruling and Its Implications for Coinbase Inc.

Coinbase Inc., has experienced a significant surge in its stock price following a pivotal federal court ruling. The decision, which ordered Ripple Labs Inc.

Coinbase (NASDAQ:COIN) stock rose 7% on Monday after a federal court ordered Ripple Labs Inc (OTC:XRPUSD) to pay a substantially reduced penalty compared to what the US Securities and Exchange Commission (SEC) initially sought.

The court ordered Ripple to pay $125 million, a fraction of the nearly $2 billion sought by the SEC.

What Happened: The SEC filed a lawsuit against Ripple in December 2020, alleging the company raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.

The court ruled that the SEC failed to prove its case that XRP, the digital asset sold by Ripple, is a security under federal law, a key factor in determining the penalty amount.

Coinbase is facing allegations from the SEC that it operated as an unregistered securities exchange through its staking-as-a-service program, which allows cryptocurrency holders to earn rewards for holding certain tokens.

The SEC alleges that the service should have been registered as a securities offering, and the company could face potential fines of up to $4 billion if found liable.

Coinbase stock closed Friday at $178.02 and hit a high of $191.04 during Monday’s session.

The recent court ruling and its implications for Coinbase were not mentioned in the company’s filing for Q4 earnings last week, which beat analysts’ estimates.

Coinbase reported a net loss of $557 million, or $2.45 per share, compared to earnings of $3.3 billion, or $14.45 per share, in the prior-year quarter.

The company’s revenue for the quarter was $1.17 billion, compared to $2.5 billion in the prior-year quarter and beat analysts’ estimates of $986.3 million.

Coinbase said it had total assets of $9.2 billion as of March 31, 2023, compared to $26.2 billion at the end of December 2022.

Crypto Price Action: Following the court ruling, XRP price rose and was last seen trading at 61 cents, a 2.3% increase.

Bitcoin price rose 8% and was trading at levels below $60,000 at press time.

The recent court ruling and its implications for Coinbase were not mentioned in the company’s filing for Q4 earnings last week, which beat analysts’ estimates.

Coinbase reported a net loss of $557 million, or $2.45 per share, compared to earnings of $3.3 billion, or $14.45 per share, in the prior-year quarter.

The company’s revenue for the quarter was $1.17 billion, compared to $2.5 billion in the prior-year quarter and beat analysts’ estimates of $986.3 million.

Coinbase said it had total assets of $9.2 billion as of March 31, 2023, compared to $26.2 billion at the end of December 2022.

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