The long lawsuit between Ripple and the SEC for allegedly selling unauthorized securities appears to be coming to a close, and everybody is asking: did Ripple lose the lawsuit?
Did Ripple lose the lawsuit against the SEC?
One of the longest-running lawsuits in crypto history, pitting the SEC, the regulator of the US stock exchange, and crypto payments specialist Ripple, appears to have reached the end credits.
In recent weeks, the crypto company, having won many victories on the legal side, asked the court for a ruling. And Ripple’s top management is convinced that this story will end on a positive note for them. The company’s CEO, Brad Garlinghouse, said in early October that he was convinced the lawsuit would come to a ruling in no more than three or four months.
Moreover, also on the same occasion Garlinghouse accused the SEC of targeting XRP, and has, instead, allowed greater freedom of movement to Ethereum, which so far has not been touched by any investigations by the US stock exchange regulator.
The issue that has been dragging on since December 2020 concerns the sale of Ripple tokens worth $1.3 billion, which were allegedly sold without authorization, the SEC says. However, Ripple reiterates that since it was not an security, no wrongdoing had been committed.
In the more than two years of the SEC – Ripple lawsuit, there have been many low blows from both sides, but in recent months the case has seemed to lean sharply in favor of the crypto company. Starting with the favorable testimony of 3,000 token holders who have agreed to back Ripple. Or like the testimony of a former manager of the SEC itself, William Hinman, who in an old speech in 2018 had corroborated the argument brought by Ripple regarding tokens and securities. The SEC had always objected in court to this document being recognized as trial evidence.
However, last September Judge Anna Torres forced the SEC itself to present this document recognized as evidence in court.
And that is why Ripple’s lawyers are almost certain that they now have the case in the bag:
“The filings show that the SEC is acting outside their legal limits. The SEC is not looking to apply the law – they are looking to remake the law in the hopes that it can impermissibly expand their jurisdiction.”
The price of Ripple (XRP)
Not surprisingly, in the past month Ripple’s stock has gained more than 37% in a market that remains consistently quite weak and nervous. The stock now trades at around $0.47, with daily volumes rising sharply. Many analysts are convinced that a victory in the lawsuit against the SEC could lead the stock to break through the strong resistance set at $0.5. But from the standpoint of Ripple’s stock price, it is noteworthy that its performance in the stock market is greatly affected by the lawsuit against the SEC. It was the only one of the big assets not to record an all-time high in November 2021, staying well short of its 2018 personal best at over $3.
On the other hand, in a recent tweet David Schwartz, the company’s Chief Technology Officer, denied that he would be on the verge of leaving Ripple. The news had leaked out, after it was reported on 21 October that cryptographer Nik Bougalis, was parting ways with Ripple. Bougalis had worked about ten years at XRP, making key contributions to the company’s development. Via Twitter, he described his journey as “amazing,” adding that he was grateful to Schwartz and other teammates.
Schwartz responded by saying he is “sad” that he can no longer work with Bougalis, but is glad his former colleague is moving on. But at the same time he made it clear that he is by no means planning to leave Ripple.
I'm sure you guys heard that @nbougalis is leaving @Ripple. This is always bittersweet. I'm sad that I won't be working closely with Nik anymore. But I'm also glad he's personally moving forward. 1/4
— 𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 (@JoelKatz) October 22, 2022
John Deaton, the founder of Cryptolaw, a legal advice and information platform related to the cryptocurrency world, wrote a lengthy post on the company’s blog praising the testimony of the 3,000 Ripple token holders. The platform had filed a class action lawsuit against the SEC over its lawsuit filed against Ripple two years ago.
Cryptolaw’s founder controversially wrote:
“I’ve been granted amici curiae status for the benefit of XRP holders. The SEC, however, isn’t too happy about it. They attacked me personally and continue to take shots at the very people they claim they are protecting while prosecuting this case espousing an outrageous theory.
Although it laments amici’s presence in this case, the SEC has only itself to blame for amici’s involvement. In short, if the SEC had clarified its theory regarding XRP, it would’ve prevented amici’s involvement entirely and could have pursued Ripple without involving us. Nine days after the SEC filed the excessively broad complaint, in the interests of present-day XRP holders.”
Ripple moves closer to victory against SEC
Deaton is referring to the decision made by the court to grant the request of the Digital Chamber of Commerce, a US blockchain technology advocacy group, to file an amicus curiae brief in favor of Ripple.
The submitted brief reads:
“The court has previously asserted, correctly, that a digital asset is not a security solely by virtue of being represented in digital form or recorded on a blockchain ledger.”
In addition, Deaton cites the date of 24 October as one of the decisive dates in the SEC-Ripple case:
“The public will get to read limited redacted versions of the opposition only. Unfortunately, the public will not be able to read the 56.1 statements, counter statements, exhibits, deposition testimony, etc., until late December or January.”
The SEC now, according to what are some rumors, may be looking to use legal technicalities it has already adopted to delay the delivery of these documents. Its goal, according to many experts, would be to try to drag out the lawsuit even longer, pending the new regulations that are expected to come soon on the industry.