Ripple CTO Reacts to Coinbase Lawsuit Prediction, What Happened?

Ripple CTO David Schwartz joins a discussion on X, bordering on Coinbase's newly-launched prediction markets.

On Friday, Coinbase revealed it had filed lawsuits in key U.S. states, including Connecticut, Michigan and Illinois. This comes shortly after Coinbase unveiled its prediction markets powered by U.S.-based prediction markets operator Kalshi.

In a systems update on Dec. 17, Coinbase said that it would begin offering its customers the ability to trade event contracts on its platform through a partnership with Kalshi.

Coinbase plans to offer event-contract trading to its customers throughout the United States beginning in January 2026, hence the reason for the lawsuit.

States like Illinois have laws in place that Coinbase says seek to prevent its clients from accessing event contracts, which the cryptocurrency exchange defines as "a type of derivative instrument extensively regulated by federal law that can be traded only on federally registered exchanges in transactions facilitated by federally registered intermediaries."

Ripple CTO clarifies misconception

Coinbase filed its lawsuit to prevent the unlawful application of gambling laws to event contracts.

An X user predicted that Coinbase might lose its lawsuits, prompting discussion on what truly defines an event contract.

Correcting a misassumption brought up in the X conversation, Schwartz responded, "You're confusing the contract with the event underlying the contract."

The Ripple CTO added that "Whether the contract is a derivative depends on the nature of the event underlying it. Event contracts are defined as derivative instruments that enable parties to trade on their predictions about whether a future event which may relate to economics, elections, climate, sports, or anything else of potential commercial consequence will occur."

In XRP news, XRPL Lending Protocol, a new protocol-native system that enables on-ledger lending for institutions while also allowing XRP holders to earn institutional-grade yield, is underway.

Relevant amendments are expected to enter validator voting in late January 2026, marking a major step toward activating protocol-native credit markets on XRPL.