- The U.S. Securities Exchange Commission (SEC) is set to appeal a ruling in favor of Ripple as both sides prepare for a high-stakes court showdown scheduled for Q2 2024.
- Legal expert John Deaton reveals crucial undisclosed information that could influence the case’s outcome, pointing out that the SEC had internally reviewed and did not act against XRP as a security in 2018.
A Tense Pretrial Atmosphere: Ripple’s Defiance Meets SEC’s Persistence
The cryptoverse is on the edge of its seat as Ripple and the United States Securities Exchange Commission (SEC) ready their arsenals for the second act of a legal drama that has captured widespread attention. In a new twist, the SEC recently signaled its intent to file an interlocutory appeal against the ruling handed down by Judge Analisa Torres, which was largely favorable to Ripple. While Ripple opposes the SEC’s appeal, defense lawyer James Filan has revealed that trial dates for Q2 2024 are already being coordinated.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 23, 2023
The Unveiling of a Potential Game-Changer: The SEC’s Unpublished Memo
John Deaton, a lawyer representing XRP holders, has provided tantalizing clues as to what might shape the case’s final judgment. Deaton unveiled a hitherto undisclosed memo from June 2018 penned by the SEC’s own enforcement lawyers. Significantly, Judge Sarah Netburn considered this memo noteworthy enough to mention that its authors had not recommended any enforcement action against the XRP token. In essence, the SEC had mulled over whether XRP should be considered a security but did not find sufficient grounds to act upon it.
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The application of the Howey Test— a longstanding criterion used to evaluate whether an asset qualifies as a security— is also expected to be a pivotal debate point. Deaton has criticized the SEC for its misapplication of the Howey Test in the context of cryptocurrencies, a contention that Ripple’s legal team is likely to echo in court.
Regulatory Implications and Market Reactions
The case goes beyond Ripple and XRP; it has the potential to redefine how the SEC regulates the burgeoning crypto industry. A recent appeals court ruling that compelled the SEC to revisit its denial of Grayscale’s Bitcoin ETF proposal could also be invoked by Ripple‘s lawyers as evidence of the regulator’s faltering legal stand. Stuart Alderoty, Ripple’s Chief Legal Officer, has even stated that the SEC is “getting battered in court,” suggesting that the outcome of this case will resonate in future crypto regulatory battles.
The ever-volatile XRP token remains a market barometer in this saga. Its value had soared after Judge Torres’ initial ruling that it was not a security, thereby affecting market sentiment. As we draw nearer to the appeal and the trial, the XRP token will undoubtedly continue to be closely watched for market reactions, regardless of the courtroom outcome.
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