- The fate of cryptocurrencies is in the hands of the US Securities and Exchange Commission (SEC), which has filed a lawsuit against blockchain developer Ripple Labs Inc.
- Ripple is accused of raising approximately $1.3 billion through illegal means, according to the lawsuit, which was filed on December 22, 2020. The SEC complaint also holds Christian Larsen, Ripple’s co-founder, and Bradley Garlinghouse, Ripple’s current CEO, responsible, claiming that they profited significantly from the scheme.
- The SEC requested that Ripple pay US$1.3 billion plus interest, or the profits from the XRP coin issuance plus a little more, in its filing. If the two parties reach an agreement, it will almost certainly be for a far lower sum. Both parties must usually compromise in order to reach an agreement.
Ripple Labs raised USD 1.3 billion in funding by selling XRP tokens between 2013 and 2020. When the Securities and Exchange Commission (SEC) filed a formal complaint against Ripple Labs near the end of 2020, there were no indications from the SEC that Ripple was being monitored. Ripple was already active on over 200 exchanges at the time.
The SEC, on the other hand, believed Larsen and Garlinghouse were raising cash unlawfully because XRP was not a registered securities but was distributed to investors all around the world. Ripple Labs allegedly used market services for non-cash transactions and paid in XRP to drive its token sales, according to the SEC.
A solution might be reached as early as the end of April, according to legal experts. The creators of XRP (CRYPTO:XRP) are widely believed to have the upper hand in a prospective trial, prompting speculation that the SEC may be inclined to settle.
Despite the fact that no deadlines have been set , there are various grounds to believe that a settlement will be reached this month.
Jeremy Hogan discusses the company’s expectations for the Ripple-SEC case, which is anticipated to receive comments from Ripple defendants by April 8.
If the SEC prevails, XRP will be classified as a security rather than a currency in the United States. As a result, this could set a legal precedent for other cryptos to be categorised as securities as well. As a result, the lawsuit against Ripple is critical for all crypto stakeholders, including investors, blockchain developers, and policymakers around the world.
Ripple Labs did not respond to the SEC for 39 days. The blockchain startup, on the other hand, promptly moved to Twitter to clarify its position regarding the lawsuit, clean up its image, and keep investor confidence. The SEC’s fight, according to Garlinghouse, is not just against Ripple, but against the entire blockchain business.
Ripple defendants Brad Garlinghouse and Chris Larsen have previously submitted a motion for an extension of time to file their replies to the SEC’s First Amended Complaint until April 8, 2022. This was only granted as a written order.
Some believe a settlement to the XRP lawsuit will be made this month for two reasons:
- A lawyer with experience in these issues speculated that one might be on the way. Jeremy Hogan, the lawyer in question, is not investigating the case but is keeping a close eye on it. Hogan did note that his judgement was merely a “best guess,” but as a lawyer, his guess would be worth considering.
- The trial’s start date is swiftly approaching. If no settlement is reached, the SEC vs Ripple action will go to trial in August, according to court documents. As a result, if a settlement is reached at all, it will most likely be shortly.
The SEC is anticipated to inform the court of its position on whether additional discovery is required within a week of the individual defendants’ answers being filed. Both the SEC and Ripple have been requested to meet and agree on a timetable of information for the summary judgement motions. One week after the SEC’s submission, the sides must provide a potential joint program for court approval.
XRP lawyer Jeremy Hogan believes Ripple defendants will respond quickly. However, he expects the SEC’s compliance with future disclosure timelines and summary judgement requests to be delayed.
“Judge Netburn relates the timetables to how quickly Garlinghouse/Larsen submits their reply,” Hogan has explained the significance of when the Ripple defendants file their responses. The earlier they’re filed, the sooner the “week’s clock” starts ticking. In addition, she issued a first-time order for a summary judgement information programme.”
“The parties are expected to set a time limit for filing and finalising summary judgement briefs,” he stated. The case could be decided (in theory) at any moment after such briefs have been submitted.”
What does this all imply to XRP investors?
According to the facts provided so far, Ripple Labs is unlikely to be dissolved as a result of the SEC’s case. Ripple Labs has a number of projects in the works to enhance customer experience. It’s busy enlisting banks to utilise its payments system, and it’s working hard to strengthen its blockchain. If the SEC wins, all of this will be thrown into question. Ripple Labs’ capacity to keep working for the XRP ecosystem would be jeopardised if it had to pay out US$1.3 billion. As a result, a win would be beneficial to token holders.
The verdict, however, is significant because it will disclose how US regulators see innovation and blockchain technology.If the SEC wins, it will dampen the enthusiasm of all crypto advocates and lead to a decline in interest in cryptosystems’ technological growth.