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Ripple Celebrates 3-Nil Win as SEC Faces Major Setback in Crypto Enforcement Tactics
- The SEC has dropped all charges against Ripple executives.
- Several factors likely influenced the SEC’s current decision.
- The case could now move to appeal faster as expected, as no trial in 2024.
As Crypto News Australia has reported, Ripple has had a huge win in its ongoing lawsuit.
However, Stuart Alderoty, the Chief Legal Officer at Ripple, stated that the decision made on Thursday U.S. time is not what it may seem at first. Ripple and the United States Securities and Exchange Commission (SEC) did not come together and make a settlement deal.
Rather the SEC dropped the charges against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen in which the agency alleged they recklessly aided and abetted Ripple in the sale of XRP as a security.
Garlinghouse called the win a “3:0” score but pointed to the more sinister side of things. The CEO stated that with the lawsuit, the SEC had tried to personally harm Larsen and him.
Ironically, he said the SEC met with Sam Bankman-Fried, who is now involved in legal proceedings in one of the largest ever fraud cases in finance. The case against Garlinghouse and Larsen was not a fraud case.
John Deaton Explains
In a spaces meeting on X, lawyer John Deaton said he always believed the trial against the executives wouldn’t proceed. He said, “They [the SEC] had to proof recklessness, that XRP was so clear to be a security, that these two executives were reckless in helping Ripple making institutional sales.”
Deaton said the purpose of the suit against Larsen and Garlinghouse was “not to enforce U.S. securities laws, but for ill-conceived motives.”
He also stated that a trial would have meant that Bill Hinman likely would have been called to testify, something the SEC wanted to avoid. In addition, during a trial, other facts could be presented which may affect the SEC’s win on institutional sales of XRP.
Why Did the SEC Dismiss the Case Now?
Jeremy Hogan, another well-known lawyer, also present in the spaces meeting had an explanation to offer as to why the SEC chose to drop the charges right now.
He assumes that the SEC made an offer for settlement which Garlinghouse would have possibly found laughable. The defendants had a good case, Hogan said, and would have potentially turned down any offer and told the SEC to go to trial.
In Hogan’s view the regulator played its cards wrong and underestimated how weak their case against Ripple including Larsen and Garlinghouse was.
SEC Against Ripple is Far from Over
Bill Morgan, Australian lawyer and long-term commentator of the case, gave a reminder that by dropping charges the SEC can get to an appeal much faster.
As Jeremey Hogan put it in a post, “Settling out the individual Defendants gets the SEC to an appellate court about 9-12 months faster and saves its resources (and face) by bypassing a very difficult and overreaching case. After settlement of the individuals, the case would go straight to “remedies” litigation.”
XRP Price Up
After the news, the XRP price initially jumped past US 0.50 ($0.79), for the first time in ten days. Market intelligence platform Santiment stated, “the rise can largely be attributed to the ‘smart money’ tiers, holding between 10K to 10 million XRP, accumulating rapidly. They hold 29.5% of the supply.”
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.
