Ripple has made big strides in its long-running legal battle with the US Securities and Exchange Commission (SEC). And now, a former executive at the SEC believes that the XRP-focused case will most likely end with the securities regulator losing out.
Ripple has the upper hand in Ripple lawsuit
The main body of the lawsuit focuses on the agency’s claim that Ripple, along with its co-founder Christian Larsen and CEO Bradley Garlinghouse, traded nearly $1.4 billion of their XRP cryptocurrency through an offering of unregistered securities. The case has so far seen many twists and turns, with Ripple scoring significant procedural wins along the way.
In an interview with Thinking Crypto released on YouTube on February 21, former Managing Executive for Policy at the SEC, Joseph Hall, said he thinks Ripple’s fair notice defense is quite strong. “I’m very sympathetic to that argument. It’s a basic due process argument. The Ripple network was operating for years before the last-minute filing of a lawsuit against them,” Hall stated.
As you may know, Ripple has been around since 2012, but the SEC filed a scorching complaint eight years later during the waning days of the SEC chairman and other key decision-makers. Hall doesn’t understand why the SEC decided to file a lawsuit or what they are trying to prove with the XRP lawsuit.
This one-of-a-kind lawsuit will not only decide the fate of Ripple but could also have a lasting impact on the entire crypto industry. As Hall sagely points out, the SEC’s “entire regulatory project could be shut down if they lose on the merits, and I think there’s a pretty good chance that they will lose on the merits.”
The case has notably been entangled in numerous disputes and delays in discovery, which Hall describes as “little skirmishes” akin to lawsuits heading for a trial.
The former SEC official also noted that the thousands of XRP holders involved in the case represented by attorney John Deaton are “compelling” and could leave the judge scratching their heads. However, he does not think it will have any “deciding role in what the judge determines in terms of whether or not XRP is a security.” Instead, the judge will use the 76-year-old Howey Test.
In recent weeks, things have started to heat up in the case, with the magistrate judge delivering several rulings on the motions. Hall expects real substantive action in this case for the year. However, litigation is slow, and an appeal is still possible regardless of the outcome of the district stage where the case is currently located. For this reason, Hall added, resolving this year seems highly unlikely.
The stake in the lawsuit has spiked even higher for both parties in recent months. Considering how both Ripple and the SEC were deeply involved in the case, the possibility of a settlement is unlikely.
It remains to be seen whether Ripple will win the larger fight against the SEC as Hall predicted. Ultimately, a win for Ripple would boost the crypto sector, which has long blamed the SEC for failing to develop a sensible way to regulate digital assets.
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