The SEC has compared the case with Ripple to the one with John M. Fife, sending the New York court a memorandum in which it compares the judicial events. In that case, Fife’s defensive arguments were rejected.
SEC and Ripple case: similarities with Fife
According to the SEC, John M. Fife’s case involves five companies that he controlled and whose business was centred on the purchase of banknotes convertible into penny stocks, which were then converted into shares and sold at a discount to market value. In this way, they allegedly made profits of $61 million.
This business also came under fire from the SEC for the unauthorized sale of securities, the same charge brought against Ripple. The lawsuit began in September 2020, ahead of XRP’s lawsuit in December 2020.
Fife’s defence was similar: they never received any fair notice from the SEC that their conduct was wrong and violated the law. The judge, however, rejected this argument.
Could the same happen with Ripple?
The lawyer’s opinion
According to Jeremy Hogan, an experienced lawyer who is following the Ripple case, the two cases are different because Fife’s defence was all about fair notice, i.e. failure to notify illegal behaviour.
In the case of Ripple, it is the SEC that is trying to revise the concept of fair notice. Either way, there will have to be some evidence on which the judges will base their ruling. For Hogan, the cases are similar but different.
The price of XRP
XRP has not been particularly affected by this news. In the past few days, it has been falling like the entire crypto market. Over the past week, its price has fluctuated from 84 cents to 72 cents.
As of today, XRP is hovering just above parity at $0.74.
Brad Garlinghouse’s opinion
Despite the lawsuit with the SEC, according to Ripple CEO Brad Garlinghouse, 2021 was the best year yet for the XRP ecosystem:
Proud to say it was @Ripple’s strongest year ever (XRP-based On-Demand Liquidity payments account for 25% of $ volume across RippleNet, and ODL txns are up 25x from Q3 2020, and 130% QoQ). 4/10 https://t.co/2V2ORfzTqm
— Brad Garlinghouse (@bgarlinghouse) December 22, 2021
The problem of having to provide answers to a growing industry remains. But regulatory uncertainty, according to Garlinghouse, as well as the aggressiveness shown by SEC chairman Gary Gensler, are already driving many crypto companies out of the US.
He hopes that Congress understands that it needs to act now and provide answers to the industry.
However, the SEC’s new move with respect to Ripple seems to be going in a completely different direction.