- The SEC and Ripple are preparing for the second phase of their legal dispute, with Ripple recently opposing the SEC’s intention to appeal the initial court decision.
- Pro-XRP lawyer John Deaton suggests that ongoing litigation involving Coinbase and the SEC could heavily influence a potential settlement between Ripple and the SEC.
A Legal Chess Match: Unpacking Ripple’s Objection to the SEC’s Appeal
On September 1, 2023, James Filan, a defense attorney, revealed that Ripple had officially opposed the U.S. Securities and Exchange Commission’s (SEC) intention to appeal the court’s earlier ruling, which identified XRP as a security. Ripple’s objection is rooted in the premise that the SEC has failed to fulfill the criteria for an appeal, particularly those related to the Howey test, which assesses whether a financial instrument is a security.
SEC’s Legal Grounds Under Question
In its initial dispute, Ripple accused the SEC of deviating from established legal frameworks, emphasizing that the SEC had not adequately addressed the specific legal grounds for an interlocutory appeal. An “interlocutory appeal” is an appeal of a ruling by a trial court that is made before the trial itself has concluded. This stands in contrast to ordinary appeals that occur post-trial.
The SEC, for its part, argued that significant legal questions remained unanswered, justifying the agency’s call for an appeal. However, Ripple contends that these alleged “controlling questions of law” are not straightforward enough to expedite the appellate court’s decision without a comprehensive review of existing records. This nuanced legal situation showcases the intricate and evolving relationship between digital assets and securities laws in the United States.
The Coinbase Connection: A Key to Settlement?
Amidst the tangled legal web, John Deaton, a pro-XRP attorney, outlined a possible route to settlement for both parties. He pointed out that the legal skirmish between Coinbase and the SEC could serve as a significant determinant for Ripple‘s case. Specifically, if the judge in the Coinbase case rules in favor of the exchange, it would mark token sales on the platform as not subject to U.S. securities laws. Such an outcome could drastically constrain the SEC’s ability to push forward with an appeal against Ripple, making a settlement more likely.
The point here is this: What could have happened regarding adoption of #XRP during the last 3 years, if the lawsuit was never filed? 🤷♂️
Would Coinbase today be announcing it acquired a stake in Ripple, instead of @circle? 🤷♂️
But I do know, despite Ripple’s continued and… https://t.co/pGzOaWsGZX
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— John E Deaton (@JohnEDeaton1) August 22, 2023
This looming decision in the Coinbase case could, therefore, play a vital role in shaping the trajectory not just for Ripple but for the cryptocurrency industry as a whole. For example, a ruling in Coinbase’s favor could significantly undermine the SEC’s ability to bring similar cases against other crypto firms, potentially setting a new legal precedent.
Ripple and the Larger Crypto Landscape
Ripple’s Chief Legal Officer, Stuart Alderoty, and CEO Brad Garlinghouse, have been paying close attention to the SEC’s performance in other crypto-related cases. Observing that the SEC has faced defeats, they suggest that these outcomes might foreshadow the SEC’s prospects against Ripple. In the interim, XRP’s price has rebounded to around $0.50, showing marginal gains.
The lawsuit’s implications extend beyond Ripple; they reach into the broader crypto ecosystem, potentially affecting the regulatory status of numerous digital assets. In this high-stakes chess match, each move by Ripple and the SEC will likely reverberate across the cryptocurrency landscape, shaping the future of digital asset regulation in the United States.
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