With 2023 approaching, here are key events that determined course of SEC vs. Ripple case in 2022

By Selena On Jan 1, 2023

The event that turned the crypto market crimson red and sent all of the too-exuberant “bulls” to repair their broken horns will undoubtedly be remembered most as the year comes to a close. Only one coin and one cryptocurrency company saw 2022 as the continuation of the struggle for survival rather than its start. We are referring to XRP, Ripple, and its rival SEC, led by Gary Gensler.

SEC vs. Ripple: The Major Highlights and Key Twists of 2022

The conflict between the potent regulator and the cryptocurrency industry resembled an ongoing game of tug-of-war, which was quite taxing. That is undoubted to Ripple’s advantage, as they have only the “fair notice” defense at their disposal.

Instead of actual advancements, the field surrounding the case was crowded with end-date forecasts. However, it was made public through the legal system in February that Ripple had discussed XRP’s “not a security” classification with outside counsel in 2012, years before the SEC became aware of digital payments. Ripple started to win little victories here and there from this point on in the litigation, but not enough for Judge Torres to allow the company’s CEOs Brad Garlinghouse and Chris Larsen’s motions to dismiss the case in March.

In the meantime, though, the court dismissed the commission’s challenges to Ripple’s one and only “fair notice” defense, and the procedure was restarted. The next significant success for Ripple came in April when a judge rejected the commission’s request to suppress crucial documents. It’s important to remember that the commission aggressively attempted to keep the secondary “storyline” regarding statements by former SEC chairman William Hinman out of the way during the entire process.

The lawsuit has made a major point of focusing on Hinman’s speeches. When Magistrate Judge Netburn criticized the commission’s attempts to conceal several facts for hypocrisy in July and its attorney-client privilege claims to keep Hinman’s records secret were rejected, the matter had finally reached a heated and somewhat chaotic stage.

Brad Garlinghouse put legal fees at $100 million already, while Jed McCaleb sold off millions of XRP from his “taco stall,” disclosing plans for an IPO and threatening to leave the country if Ripple lost the case. The SEC also failed to stop XRP holders from joining John Deaton’s class action complaint against the regulator, which included tens of thousands of them.

When significant events started to take place in the middle of September, the tug of justice stopped being tugged in several directions. The first was an article by the U.S. Chamber of Digital Commerce that attacked the SEC and stated that it wanted to join the litigation as an impartial third party by submitting an amicus brief. Later, there would be 16 such filings, most of which favored XRP and Ripple.

The option of resolving the issue through summary proceedings also emerged, and the parties were informed of the timeframes.

Judge Torres ultimately decided to turn over internal papers, drafts, and letters from William Hinman to Ripple in late September, which was a significant intermediate triumph. Then, after some time had passed, when they were finally released, Ripple’s general counsel, Stuart Alderoty, claimed that the battle to obtain the records had been worth it and that after receiving them, his attitude toward the SEC had worsened.

I’ve always felt good about our legal arguments, and I feel even better now.
I always felt bad about the SEC’s tactics, and I feel even worse about them now.

— Stuart Alderoty (@s_alderoty) October 20, 2022

A rising number of people were also prepared to submit amicus papers in support of XRP and Ripple, and the SEC responded by taking action to prevent them from doing so. Spoiler alert: they failed.

This time behind closed doors, the process went on with the participants actively exchanging changes to one another’s proposals. As a result of the Blockchain Association and Coinbase filing their amicus filings, sentiment in the cryptocurrency sector was gradually shifting in favor of a Ripple triumph. However, a significant new setback for Ripple materialized when cryptocurrency business LBRY lost its legal battle with the SEC over the SEC’s recognition of its LBC coin as an unregistered security. It’s becoming clear that the regulator will consider this precedent when deciding how to respond.

The conflict went on in November, but the public’s attention was drawn to the demise of FTX. This significant cryptocurrency exchange had been rendered insolvent by the criminally negligent activities of its executives. To reach a summary decision, the parties continued communicating by exchanging documents, changes, and responses behind closed doors.

The parties’ final move at this point was to submit motions for summary judgment and all requisite oppositions and replies, filed under seal. So, even though 2022 was the last year, the crypto-regulatory epic will continue into the third year. However, it is undeniable that this year has greatly expedited things and, more crucially, exposed the issues that authorities now have with cryptocurrencies.

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