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Ripple Prepares for Prolonged Legal Fight as SEC Requests Extension to January 2025
- The SEC has appealed Judge Torres’ ruling, seeking more time to prepare their main arguments against Ripple’s XRP sales.
- Ripple faced a fine for institutional XRP sales but was largely successful in court, with a 94% reduction from the SEC’s requested penalty.
- Expectations are set for no resolution before 2026, potentially benefiting Ripple and XRP amid legal and regulatory shifts.
- Political changes and new SEC leadership could significantly influence the outcome of the ongoing lawsuit.
It appears that the appeal in the case US Securities and Exchange Commission (SEC) against Ripple Labs will be with us for quite a while longer.
The story with Ripple and the agency began in December 2020 when the SEC filed a lawsuit against the firm and its executives Brad Garlinghouse and Chris Larsen, alleging that XRP is an unregistered security and that the company unlawfully raised more than US$1.3 billion (AU$1.95 billion) through the sale of the cryptocurrency.
SEC Seeks Extension to File Principal Brief
In July 2023 Judge Analisa Torres ruled that XRP is not a security in the context of programmatic sales, but that institutional sales of XRP by Ripple are. In the end, Ripple received a US$125 million (AU$188 million) fine for the institutional sales, a 94% reduction of the US$2 billion (AU$3 billion) the SEC had asked for.
The SEC then filed an appeal against Torres’ decision about the sale of XRP on exchanges, as well as the distribution of XRP by Ripple to staff and other parties and executives’ XRP offers.
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Now, the SEC has requested an extension until 15 January 2025 to file its principal brief, which means that the SEC is seeking more time to prepare and submit the main written argument for their side of the case.
This is a formal document that will outline the SEC’s legal arguments and reasons for appealing earlier court decisions that favoured Ripple. While it may seem that this is a delay tactic, this is actually within the timeframe the court allows.
Nevertheless, attorney Fred Rispoli wrote on X that we shouldn’t expect a resolution of the case before 2026. However, there’s no need for panic, as that may actually be a good thing for Ripple and XRP, likely shielding XRP use until potential legislative changes:
Change in US Administration Could Alter Outcome of Lawsuit
While Rispoli touched on federal legislation that could render the SEC’s lawsuit meaningless, he also said a change in the agency’s leadership could help. A new agency chair might want to drop the case altogether, depending on who that will be.
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The SEC could withdraw its appeal at any time. Odds depend on who is Chair. If it’s Hester, I say 80% chance appeal would be dropped.
Fred Rispoli Donald Trump has said he would remove Gary Gensler as the Chair of the SEC on “day one” of his presidency if he wins the White House. But even a Harris administration could be a departure from the anti-crypto sentiment of the Biden years.
Ripple CEO Brad Garlinghouse believes that while a Trump win is seen favourably by most in the crypto industry, a Harris win could mean “we’re going to have a more pro-crypto, more pro-innovation Congress than we’ve ever had”.
Anybody who doesn’t believe that no matter what, we’re going to end up in a better place, is not paying attention. [In] 10 years we look back on how the U.S. got it wrong for years and years. […] It’s going to be a speed bump, and this industry is going to continue to thrive.
Brad Garlinghous, Ripple CEO Meanwhile, Ripple is expected to file its Form C to detail its appeal points against the SEC’s case, focusing specifically on challenging the district court’s decision that its institutional sales of XRP were unregistered securities sales.
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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.
