The Securities and Exchange Commission is the watchdog of the crypto industry today (SEC). Its mission is to protect American investors. To accomplish this, they regulate the securities market. Yet, in December 2020, the SEC filed a lawsuit against Ripple Labs. Two years later, we present an update on the protracted Ripple litigation.
Before we move forward, let’s take a trip down memory lane. How did the Ripple lawsuit initially come about?
In 2013, the SEC contended that Ripple Labs sold $XRP as an unregistered security. In other words, Ripple has broken securities regulations.
But wait! There’s more! Additionally, the SEC has sued:
- Chris Larsen is Ripple’s co-founder and chairman.
- Brad Garlinghouse is Ripple’s CEO.
Why were they in the sights of the SEC? First, they were accused of selling XRP from their wallets without registration. Second, they were accused of utilizing XRP sale revenues for company operations.
In defense of Ripple, they never considered $XRP to be a security. Therefore, they were not required to comply with SEC regulations for securities.
So, who is correct and who is incorrect? Judge Analisa Torres alone knows the answer. For the time being, all we can do is keep you apprised of the latest developments in this protracted lawsuit.
Latest Update on XRP Case
First Update: Jed McCaleb’s Sale
It is generally accepted that the company and its co-founders hold a significant portion of the XRP supply. Indeed, Ripple’s first co-founder, Jed McCaleb, owned 18.6% of the circulating amount of $XRP. It comes to more than nine billion XRP or $3.33 billion at current exchange rates!
Thankfully, Jed sold all of his XRP in July of last year. Since 2014, he has been no longer employed at Ripple, having departed to establish the Stellar Foundation.
What does this imply for holders of XRP? The community is relieved that Jed no longer exerts sales pressure. But was it truly worthwhile? Due to Jed’s protracted selling, the price of $XRP was kept low. The litigation between Ripple and the SEC wiped out retail interest in $XRP. Due to this double whammy, $XRP has yet to approach its January 2018 all-time high (ATH) price of $3.40.
Second Update: Fox Business Cries Wolf
In November 2022, Fox Business made an internet error on the Ripple case. They announced that the SEC and Ripple had achieved a settlement. However, this needs to be more accurate, and there was never a settlement.
The conflict between the SEC and Ripple still needed to be resolved. Brad is persistent and determined to win this case, as his tweet demonstrates.
Third Update: The SEC prevails against LBRY
Ripple is one of many initiatives in the SEC’s sights. In March of 2021, LBRY, a blockchain-based content-sharing platform, was taken to court. The causes were comparable to those of the Ripple litigation in the form of $LBC coins. The SEC accuses LBRY of selling unregistered securities.
Unfortunately, the court sided with the SEC against LBRY. Unquestionably, the SEC will use the LBRY litigation as an example to promote their success against Ripple.
Fourth Update: Amicus Briefs
Let’s go on to the actual Ripple lawsuit. Our earlier report mentioned the amicus filings from the lawsuit as mentioned above. Since then, five other organizations have announced their support for Ripple. They do so by urging the court against the SEC’s vagueness in its regulations.
Currently, sixteen groups support Ripple against the SEC. Among these are industry titans such as Coinbase and remittance startups such as I-Remit.
Fifth Update: Motions to Seal
In the continuing Ripple litigation, Motions to Seal are pending. It indicates that both parties are requesting to have documents sealed. It renders the document private. Consequently, they would be kept private. Let’s examine what each side is attempting to accomplish.
Ripple. Ripple is attempting to encrypt eleven sorts of documents. The total number of documents exceeds 900. The SEC opposes the sealing of five categories of those papers as of today. Ripple believes these documents must be sealed because they contain critical business information.
It is the SEC. The SEC is attempting to suppress Hinman’s speech (made on June 2018). In our last piece, we discussed the Hinman documents. In September 2022, the court ordered the release of these items. Former SEC Division Director William Hinman stated that Bitcoin and Ethereum are not securities. Ripple would then utilize the speech and the records to advance its argument.
The bottom line
The case against Ripple involves more than two parties. The conclusion is likely to affect the regulatory environment for the entire cryptocurrency industry. Ripple’s attempts to promote transparency are praiseworthy.
The balances of justice are leaning somewhat in favor of Ripple. In cryptography, however, nothing is ever assured. As the lawsuit nears its conclusion, there is nothing left to do but await the court’s verdict for the outcome.
