The Ripple vs SEC case is unfortunately not a new one, and with only a short step away from its final turn, the most pressing question for the XRP community is how the lawsuit between Ripple Labs and the US Securities and Exchange Commission will end.
In addition to a ruling in Ripple’s favor, the community is also hoping for a settlement that could impose a penalty on Ripple but classify all current XRP sales as unsafe.
As a reminder, the ongoing legal dispute between the SEC and Ripple began in December 2020, when the SEC initiated legal action against Ripple. Specifically, the SEC alleged that Ripple raised $1.3 billion by offering Ripple’s native cryptocurrency, XRP, as an unregistered security
From the outset, Ripple disputed the allegations, explaining that XRP should be considered a virtual currency and not a security. And, from the very early days of the clash between the two, Ripple has pointed to the SEC’s lack of evidence.
Armstrong’s predictions for the XRP community: Ripple will win
Pro-XRP crypto blogger and activist Ben Armstrong, aka BitBoy, recently shared an extremely optimistic prediction for 2023. In his prediction, in fact, Armstrong speaks directly about Ripple, which he says will win its lawsuit against the SEC.
Moreover, again according to the crypto blogger, the new year should be the time when the current head of the regulator, Gary Gensler, will be forced to step down. Early last year, similar comments were made on social media, even before the collapse of cryptocurrency exchange FTX.
Armstrong’s predictions are confirmed by his official Twitter account, which reads:
2023: The year the $XRP case ends and the Ripple curse is broken.
Also the year @GaryGensler is forced to resign from the @SECGov
— Ben Armstrong (@Bitboy_Crypto) January 1, 2023
Deaton less optimistic about Ripple: no preliminary deal
Attorney John E. Deaton, who represents 75,000 XRP investors in the lawsuit with an amicus brief, recently posted a poll on Twitter asking what outcome the community expects in 2023 for Ripple.
Out of 18,000 votes, 59% of people who responded to the poll said they expected a settlement between Ripple and the SEC. Surprisingly, however, Deaton changed his mind and is among the 39% who expect a verdict from Judge Analisa Torres.
As the lawyer explains, he initially believed that Hinman‘s threatening documents were “extremely valuable” to Ripple and “extremely damaging” to the SEC. However, Ripple’s latest summary judgment letter paints a different picture. In fact, Ripple’s letter cites four pages of the emails and no comments about XRP.
And it is in regard to this that Deaton expressed his opinion:
“Before reading the last two Ripple Briefs, I thought it was likely that XRP was referenced in the emails. Since ETH was getting a regulatory free pass, I thought it possible, if not likely, that someone in the email chain of Hinman’s speech might have asked, “What about XRP?”
At this point, Deaton is no longer of that opinion. He no longer believes that XRP was mentioned in emails, comments, or drafts. If XRP itself had been mentioned in the e-mails, Ripple’s lawyers would certainly have mentioned it in the pleadings, Deaton says.
According to the lawyer, it may have been simply a statement that mere possession of a quantity of an asset or token is not sufficient to satisfy the common enterprise factor under Howey, despite the SEC’s assertion to the contrary.
Since the emails and comments are probably not as damaging to the SEC as initially believed, and thus would frustrate the entire cryptocurrency regulatory strategy, Deaton believes that a settlement is no longer the most likely outcome.
In fact, Deaton also stated:
“The only other reason Gensler has to settle is to avoid a ruling that sets a bad precedent for the SEC as it goes against other tokens. But I don’t think he’s too concerned about that. I don’t think he will publicly accept that ongoing and future XRP sales, even in the secondary market, are not securities.”
Bill Morgan: words for Ripple from the other lawyer from the XRP community
Another lawyer in the XRP community, Bill Morgan, partially disagrees with Deaton. In fact, according to the Australian, it is likely that the SEC will decide the sealing issue in his favor on procedural grounds. Thus, Ripple will not be able to use the Hinman documents as a bargaining chip for a settlement.
In any case, Morgan does not believe that this means there will be no settlement or that it is less likely. According to the lawyer, there is a lot at stake for the SEC should it be determined that the Howey test is inapplicable to XRP, as he says:
“There is a lot to lose for the SEC if Ripple’s arguments on the blue sky issue and joint venture are accepted by Judge Torres. The stakes for both sides are high and in this consideration the risks of losing should only be greater for both sides, with SJ motions having been fully briefed.”
Moreover, a defeat against Ripple would also undermine the SEC’s plan to expand its reach into the secondary cryptocurrency trading market, which is why Morgan believes there is still a good chance of a settlement.
In any case, it appears that 18 January is the last important date before Judge Torres works out a verdict, if no settlement agreement is announced first.