The Brave Ripple vs SEC. As we all know, the legal dispute… | by Deniz Tutku | Coinmonks | May, 2023
As we all know, the legal dispute between Ripple and the Securities and Exchange Commission (SEC) has been ongoing for almost two and a half years, but a decision under expedited proceedings could be reached any day. The legal battle between the two parties has created uncertainty within the cryptocurrency community regarding which side will prevail and how it will impact the industry as a whole. Adding to the drama are rumors that the presiding judge, Annalisa Torres, will issue an expedited ruling.
But how did it all start?
- Ripple first emerged back in 2012, entering the business with promises to provide financial institutions and other organizations with faster and more affordable cross-border payment solutions. To achieve this, Ripple created the XRP Ledger and a cryptocurrency called XRP.
- Launched in 2021, the XRP Ledger (XRPL) is an open-source, permissionless and decentralized technology. Benefits of the XRP Ledger include its low-cost, speed, scalability and inherently green attributes. The XRP Ledger also features the first decentralized exchange (DEX) and custom tokenization capabilities built into the protocol. Since 2012, the XRP Ledger has been operating reliably, having closed 70 million ledgers.
Ripple and the SEC
On December 22, 2020, the SEC filed a lawsuit against Ripple, alleging that the company’s sale of XRP constituted an unregistered securities offering. Ripple’s co-founder and former CEO, Chris Larsen, and its current CEO, Brad Garlinghouse, are also named in the SEC’s allegations.
Most major companies facing SEC enforcement actions prefer to settle and avoid litigation. However, Ripple has chosen to fight the allegations in court, even at great expense.
In a speech, William Hinman, the former director of the SEC’s Division of Corporation Finance, stated that Ethereum should not be considered a security due to its decentralized nature, saying:
“Based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions, except for the initial distribution of Ether.”
This statement can be seen as significant because it provides a clear understanding that cryptocurrencies can transition from being securities when initially created to becoming commodities once they are sufficiently decentralized. As the market evolves, this transition is likely to occur in the near future.
This could impact Ripple’s defense of fair notice, which would come into effect if Judge Annalisa Torres determines that Ripple did indeed sell unregistered securities.
Ripple, on its part, demanded the documents during discovery, and the request was granted on October 21, 2022. These documents have become a lifeline for the company, although the SEC has repeatedly attempted to keep them sealed, claiming they are unrelated to the case. On May 16, Judge Torres ruled that Hinman’s documents are “judicial records” subject to a strong presumption of public access, rejecting the SEC’s request for closure.
The outcome of this legal process will undoubtedly have a significant impact on the industry. If Ripple wins, the SEC may lose some of its authority, giving other crypto companies confidence to challenge regulatory actions. On the other hand, if the SEC wins the case, it could change the way crypto firms operate and introduce a new wave of registration rules for securities, potentially leading to increased bureaucracy.
It’s worth noting that the court has not indicated whether the documents will be used in the decision-making process. However, considering the statements from those who have seen the documents, they are likely to negatively impact the public perception of the SEC.
Amidst these ongoing events, it is important to acknowledge that the current legal proceedings are expected to have a potential impact on the price of Ripple and network performance. Despite the uncertainty, Ripple has maintained high network activity during the first half of the year.
Here’s what other people are saying on Twitter:
As we can see, even ordinary people understand how tense the process is and how prolonged it has become. In any case, we stand for truth and justice.
When will this legal process finally end?
Freda Rispoli, a well-known cryptocurrency lawyer, tweeted on May 17th that the decision in the case is in order and has already been written and can be delivered ‘any day now,’ agreeing that a separate ruling was the most likely outcome. During a Twitter Space session, Diton also noted that in his opinion, Judge Torres knows how she will deliver the decision but added that speculating on how much is written ‘in final form’ would be pure speculation. He stated that he agrees the decision could come at any time but added that it could take another month or longer. ‘How much longer do we have to wait?’ you might wonder.
Unexpectedly, the long-awaited day in court has arrived, and Judge Torres is ready to deliver her decision. The judge messaged about it, surprising not only the XRP community but also all its readers. Interestingly, while many on Twitter believe that Torres ‘took a risk to make a decision on secondary sales.
Diton noted during a Twitter Space that, in his opinion, Judge Torres knows how she will rule but added that speculating on how much is written “in final form” would be pure speculation.
He also agreed that the decision could come at any time but added that it could take another month or longer.
The long-awaited judgment day has arrived, and Judge Torres is ready to deliver her decision. While many on Twitter believe that Torres “went out on a limb to make a ruling on secondary sales.”
In conclusion, it can be inferred that the outcome of the legal case between Ripple and the SEC has the potential to significantly impact the cryptocurrency industry and the regulatory framework surrounding digital assets. The consequences of this legal process are indeed substantial. A victory for Ripple could challenge the authority of the SEC and encourage other crypto companies to contest regulatory actions. Conversely, an SEC win could lead to stricter registration rules for securities and increased bureaucracy for crypto firms.
The recent decision by Judge Torres to grant access to Hinman’s documents has added intrigue to the case, as has the judge’s statement that the ruling could be announced any day. The public eagerly awaited Judge Torres’ decision, which was expected to determine the future of cryptocurrency regulation and have a direct impact on the entire industry. Ultimately, the judge shared her decision through a messenger platform, adding further interest to the case.
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