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As Ripple Scores Win Over SEC, Rumours of Settlement Gain Momentum – Here’s What the Experts Say
In Summary
- Ripple secures important win against a “bully” regulator.
- The judge who disagrees with the SEC may have done some proper research.
- Talks of settlement between Ripple and the SEC have become louder.
Ripple has achieved an important victory over the United States Securities and Exchange Commission (SEC). In the legal battle, the regulator alleged Ripple sold XRP (XRP) as an unregistered security. While the presiding judge has ruled that XRP is not a security, the SEC sought to file an interlocutory appeal regarding sales of XRP in certain circumstances. However, Judge Analisa Torres denied the SEC this early appeal.
SEC In a Streak of Bad Luck?
While the SEC is accustomed to getting its way through enforcement action, recent examples involving Ripple, Coinbase, and Grayscale show that some are prepared to stand up to the regulator. While the SEC maintains the rules are clear for crypto, many have pointed out that there is no easy path to get a crypto project or exchange registered.
Additionally, the SEC may have caused its own demise in the case against Ripple. As Australian lawyer Bill Morgan points out, the SEC created different categories of sales, which in the end backfired as this led the judge to create “precedent for different categories of the hypothetical reasonable buyer depending on the category of sale or offer.”
Judge Torres May Have Bought Some XRP
As X user Ashley Prosper pointed out, Judge Torres used neutral language when describing a programmatic buyer of XRP. By referring to the buyer as ‘she,’ the judge indicated that she may have stepped into the role of an actual person buying XRP and tested Howey in a real environment.
Is Settlement Next?
Former Australian lawyer and Entrepreneurial Fellow at ANU College of Law, Scott Chamberlain, sees very little room left for the SEC to continue its fight against Ripple and XRP. In saying so, he believes the case may settle before the trial starts in April 2024. He said, “There’s not enough meat left on the bone and this decision gives SEC everything it needs to prevent the case from being a precedent that exchanged-based sales are never investment contracts.”
Use Case for XRP Expand
While XRP is being used by an increasing number of institutions to facilitate cross-border payments through On-Demand Liquidity (ODL), this has not been the case in the United States. However, with the latest ruling there is now no reason for U.S.-based companies not to use XRP. As the founder of Dizer Capital, Yassin Mobarak, said on X “The coast is clear and the legal risk has vanished.”
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
