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Coinbase to Suspend XRP Trading Following SEC Suit Against Ripple

Coinbase said it will suspend trading of XRP, the cryptocurrency at the heart of an SEC lawsuit against Ripple Labs.

By Nikhilesh De, Zack Seward, Lawrence Lewitinn

Updated Sep 14, 2021, 10:49 a.m. Published Dec 28, 2020, 10:30 p.m.

Brad Garlinghouse, Ripple CEO, speaks at Davos 2020.

Coinbase said it will suspend trading of XRP, the cryptocurrency at the heart of a U.S. Securities and Exchange Commission lawsuit against Ripple Labs claiming the token is really a security.

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Coinbase first listed XRP on its retail-facing platforms in February 2019. Starting now, XRP trading "will move into limit only," Coinbase wrote. It will be fully suspended on Tuesday, Jan. 19, 2021, at 1 p.m. ET.

"We will continue to monitor legal developments related to XRP and update our customers as more information becomes available," Paul Grewal, Coinbase's chief legal officer, wrote in a blog post shared in advance with CoinDesk.

Coinbase said users' XRP wallets will "remain available for receive and withdraw functionality after the trading suspension."

Notably, the exchange said it will still support an upcoming airdrop of Spark tokens to XRP holders. XRP will still be supported by Coinbase Custody and in the self-custodial Coinbase Wallet.

Coinbase declined to comment beyond its written statement.

The price of XRP on Coinbase fell from $0.28 to $0.24 within the first 20 minutes of the announcement. Since the announcement of the SEC's lawsuit last week, the price of XRP has fallen by more than 50%.

XRP's price fell over 16% within an hour of Coinbase announcing it would suspend trading.

Ripple effect

For Coinbase, the reason for dropping XRP as a traded asset was simple: As the company seeks to go public, being a platform for something that’s potentially a security would mean adding more paperwork simply so it could be legally allowed to let retail customers buy and sell a single cryptocurrency.

The SEC claimed last week that XRP is a security, and that Ripple has been selling it without registering or seeking an exemption for seven years, raising $1.3 billion in the process. The legal battle itself is just beginning, and litigation might take years if Ripple fights the charge in court, as it has indicated it would.

Coinbase is now the biggest exchange to act on XRP and could serve as a bellwether for other platforms. On Friday, Bitstamp announced it would halt XRP trading and deposits for all U.S. customers on Jan. 8.

Similarly San Francisco-based OKCoin announced its XRP suspension earlier Monday, effective Jan. 4.

Exchanges that continue to list XRP without registering as a securities exchange with the SEC face potential consequences down the line, including possible enforcement actions. However, should Ripple prevail in its defense, Coinbase can likely re-list XRP fairly easily.

Alex Kruger, a trader and analyst, said, "Crypto exchanges are unregistered with the SEC (by choice, as registering carries on many burdens and increased costs) and thus it is in their best interest to not offer trading of securities. It is for their protection, not their customers'."

Gabriel Shapiro, an attorney with Belcher, Smolen & Van Loo LLP, told CoinDesk last week that the question of whether exchanges should delist is a complicated one, with both business and legal considerations.

Read our ongoing coverage of the SEC's case against Ripple and its impact on the industry.

UPDATE (Dec. 28, 23:35 UTC): Adds XRP price reaction.

Coinbase Ripple SEC XRP

Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation, covering regulators, lawmakers and institutions. When he's not reporting on digital assets and policy, he can be found admiring Amtrak or building LEGO trains. He owns < $50 in BTC and < $20 in ETH. He was named the Association of Cryptocurrency Journalists and Researchers' Journalist of the Year in 2020.

Zack Seward

Zack Seward is CoinDesk’s contributing editor-at-large. Up until July 2022, he served as CoinDesk’s deputy editor-in-chief. Prior to joining CoinDesk in November 2018, he was the editor-in-chief of Technical.ly, a news site focused on local tech communities on the U.S. East Coast. Before that, Seward worked as a reporter covering business and technology for a pair of NPR member stations, WHYY in Philadelphia and WXXI in Rochester, New York. Seward originally hails from San Francisco and went to college at the University of Chicago. He worked at the PBS NewsHour in Washington, D.C., before attending Columbia’s Graduate School of Journalism.

Lawrence Lewitinn

Lawrence Lewitinn serves as the Director of Content for The Tie, a crypto data company, and co-hosts CoinDesk's flagship "First Mover" program. Previously, he held the position of Managing Editor for Markets at CoinDesk. He is a seasoned financial journalist having worked at CNBC, TheStreet, Yahoo Finance, the Observer, and crypto publication Modern Consensus. Lewitinn's career also includes time on Wall Street as a trader of fixed income, currencies, and commodities at Millennium Management and MQS Capital. Lewitinn graduated from New York University and holds an MBA from Columbia Business School and a Master of International Affairs from Columbia's School of International and Public Affairs. He is also a CFA Charterholder. He holds investments in bitcoin.