By Richard Hines
Coinbase cryptocurrency exchange is facing a lawsuit over its decision to withhold the airdrop of Flair tokens from holders of XRP.
Coinbase Reasons For Withholding the Airdrop
The airdrop, which took place in December 2020, was organized by Flair, a decentralized finance (DeFi) project that provides lending and borrowing services on its platform for various cryptocurrencies.
As part of this Flair program, Flair shared tokens to holders of XRP on various major cryptocurrency exchanges, including Coinbase.
However, Coinbase decided against distributing the tokens to its customers, stating major regulatory concerns.
In a statement, the exchange said it had received legal advice that the distribution of the Flair tokens to XRP holders could be considered a securities offering.
This decision led to a lawsuit being filed against Coinbase by a group of XRP holders.
The investors in the case states that Coinbase’s decision to withhold the airdrop tokens was a disloyal move, as they had anticipated their airdrop as holders of XRP.
They also stated that Coinbase’s decision to withhold the tokens is a violation of their rights as owners of the XRP.
Regulatory Uncertainty In The Crypto Space
Coinbase has been a vocal supporter for regulatory clarity in the crypto space, and has cooperated with regulators in the past to ensure compliance with all relevant laws and regulations.
However, the decision to withhold the Flair tokens shines the spotlight on the challenges that companies in the crypto space face in determining how to handle new and emerging projects and tokens.
Some speculations based Coinbase decision to withhold this airdrop on the current lawsuit ongoing between Ripple and the SEC over the XRP tokens as securities.
It is not rare for cryptocurrency exchanges to hold onto tokens from airdrops or forks, as they may not be sure whether the tokens are considered securities or not.
The decision to hold onto tokens from airdrops is usually to protect the exchange from regulatory or legal issues.
The crypto community will be closely watching this lawsuit to see how it will affect the future of airdrops and forks on major exchanges.
The outcome of this lawsuit could set a stage for how exchanges handle similar situations in the future, and could have implications for the broader crypto industry.