Ripple vs SEC Lawsuit Nearing Potential Out-of-Court Settlement
The Ripple vs. SEC lawsuit stands out as one of the most closely monitored cases in the cryptocurrency sector. Its verdict carries the potential to wield substantial influence over the prospects of Ripple, XRP, and the entire cryptocurrency industry.
Recently, a federal judge presiding in the US District Court for the Southern District of New York issued a favorable ruling for Ripple Labs in their lawsuit against the US Securities and Exchange Commission (SEC). The judge’s decision stated that Ripple’s sales of XRP did not qualify as the sale of unregistered securities. The SEC’s case hinged on the argument that XRP constituted security, falling under the SEC’s regulatory purview as an investment contract. However, the judge’s ruling concluded that XRP did not pass the Howey Test, the legal criterion used by the SEC to assess whether an investment qualifies as a security.
However, the SEC appealed the US Court hearing against Ripple. The SEC filed a notice of appeal with the Second Circuit Court of Appeals. The next hearing in the Ripple vs SEC case will likely take place in 2024. The hearing will focus on the SEC’s appeal of the judge’s ruling in favor of Ripple. The SEC is arguing that the judge made a mistake when he ruled that Ripple’s sales of XRP did not constitute the sale of unregistered securities.
Is Ripple vs SEC Lawsuit Nearing Out of Court Settlement?
The US SEC has faced back-to-back legal defeats against Ripple. After failing to prove that XRP is a security, District Judge Analisa Torres recently rejected the agency’s bid to appeal her ruling regarding XRP.
Additionally, the US SEC recently dropped charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. This was one of the possible indications of SEC likely pursuing an out-of-court settlement with Ripple. SEC also requested a briefing schedule on remedies, which is a step that is typically taken in preparation for a settlement.
Many legal experts believe that Ripple has a strong case and US SEC could likely face a defeat once again. Therefore there may be an out-of-court settlement of the case.
The terms of the settlement will be decided by the US SEC but there are rumors of the SEC demanding a $770 million penalty from Ripple for violating securities laws. This was detailed by the Crypto lawyer John Deaton on his X account. Deaton wrote, “
The SEC is pissed and embarrassed and wants $770M worth of flesh.
Implications for Ripple
An out-of-court settlement would be a major victory for Ripple. It would allow the company to put the SEC lawsuit behind it and focus on growing its business. It would also give Ripple more certainty about the regulatory status of XRP, which would make it easier to attract investors and partners.
Implications for the SEC
An out-of-court settlement would also be a positive development for the SEC. It would allow the agency to resolve the case without having to go through the full litigation process, which can be costly and time-consuming. It would also give the SEC some degree of closure on the XRP matter, which has been a thorn in its side for several years.
Implications for the Cryptocurrency Industry
An out-of-court settlement would also have implications for the cryptocurrency industry as a whole. It would send a signal that the SEC is willing to work with cryptocurrency companies to resolve disputes without resorting to litigation. This could encourage other cryptocurrency companies to come forward and register their securities with the SEC, which would help to legitimize the industry as a whole.
Overall, an out-of-court settlement between Ripple and the SEC would be a positive development for all parties involved. It would allow Ripple to put the lawsuit behind it and focus on growing its business, it would give the SEC some degree of closure on the XRP matter, and it would send a positive signal to the cryptocurrency industry as a whole.