The U.S. Securities and Exchange Commission (SEC) and Ripple are nearing the end of their legal struggle. On November 30, the parties submitted over 60-page reply briefs for summary judgment. The concerned parties must now wait until Judge Analisa Torres makes a ruling.
Ripple And LBRY Litigation Vs. The SEC Share Key Commonality
In the meantime, attention is focused on the LBRY v. SEC lawsuit. Notably, LBRY’s lawsuit against the SEC was unsuccessful in early November. It is currently unknown how the ruling will affect the Ripple lawsuit and the larger crypto sector.
Their submitted briefs are “arguably more important than the amicus briefs filed in the Ripple case,” as Deaton stated in a Twitter thread. LBC tokens are sold under a permanent cease-and-desist order request from the SEC.
The SEC informed the judge that it would not clarify secondary market transactions. As a result, the SEC declared that it would not send out a no-action letter regarding users or transactions utilizing LBC on the secondary market.
Deaton points out that his assessment of Ripple’s prospects for victory in its legal dispute with the SEC hasn’t changed. The instances are very distinct from one another and come from several circuits with various controlling precedents. The lawyer adds that LBRY didn’t oppose two of the three Howey elements.
But in both situations, there is an “overarching common problem.” The legal classification of the token and its secondary market transactions, which are entirely independent of a firm, like Ripple or LBRY, are a concern regardless of which token is involved.
The XRP token might survive even if Ripple loses. But to achieve that, there must be regulatory clarity, which the SEC is unwilling to offer in the LBRY case.
Deaton cites three incidents in his amicus brief as evidence of the SEC’s overreaching actions. First, no federal appellate court has ever ruled that the underlying asset that is the object of a transaction involving an investment contract is also an investment contract.
Furthermore, no federal court has ruled that the following transfer of an asset used in an investment contract transaction likewise counts as a securities transaction. Third, Deaton cites the court’s decision in the LBRY case, which found that classifying LBC as a security goes against Section 5 of the Securities Act.
Investors in XRP may therefore start to worry about the SEC’s lack of explanation for secondary market transactions. Deaton contends that a court order for clarification is, therefore, extremely pertinent.
“Hopefully, the judge agrees to distinguish secondary market transactions and users of the platform. It will still remain only one district court judge’s decision, but it could be used to limit the SEC’s arguments against tokens themselves”, Deaton stated.
XRP/USD 4-hour chart | Source: TradingView
At the time of publication, the XRP price was $0.34 and was heading toward a two-month low of $0.3196.
Read more:
- Binance Warns About Large Transactions With XRP, But There Is No Need To Worry
- An Attorney For Ripple Applied To Withdraw As The Co-Defendant’s Counsel In His Ongoing Lawsuit Against SEC
- Ripple-Enabled Remittances To Flow From 19 European Countries To Africa