- Recent court ruling in the Coinbase case may indicate SEC’s reluctance to settle with Ripple.
- Ripple case outcome could significantly influence cryptocurrency regulations.
In what could be a defining moment for the cryptocurrency industry, recent developments in the Coinbase insider trading lawsuit have cast a long shadow over Ripple’s ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
A notable member of the XRP community has voiced concerns that these developments may signal the SEC’s reluctance to settle with Ripple, suggesting a potentially protracted legal struggle ahead.
The Court’s Critical Stance on Crypto Securities
A pivotal turn occurred when a U.S. court recently ruled that certain cryptocurrencies traded on secondary markets qualify as securities. This ruling emerged from the insider trading lawsuit involving Coinbase’s former product manager Ishan Wahi, along with his brother Nikhil and friend Sameer Ramani.
The case, which has drawn significant attention since the SEC’s charges in 2022, reached a critical juncture when the court issued a default judgment against Ramani, who had fled the country to evade prosecution.
The judgment, which ordered Ramani to forfeit $817,602 gained from illicit trading, underscored the court’s view that the traded tokens constituted investment contracts under the Howey test.
Ripple Legal Battle and Broader Implications
This backdrop sets the stage for the ongoing legal tussle between the SEC and Ripple. The case took a notable turn when a federal judge ruled in favor of Ripple, stating that its sale of XRP to retail investors did not violate federal securities laws.
This decision was, however, met with dissent in another SEC case by U.S. District Judge Jed Rakoff, illustrating the complex and often contradictory legal landscape surrounding cryptocurrencies, according to a prior report by ETHNews.
The Road Ahead: No Settlement in Sight
Amid these developments, speculation abounds that the Ripple case may not see a settlement until the Second Circuit affirms the decision in Ripple’s favor. The XRP community, particularly members like Prosperity Fund, have voiced concerns over the SEC’s potential appeal to overturn Judge Torres’ ruling.
The uncertainty is further compounded by the ongoing remedies phase in the Ripple case, which will determine the penalties or fines to be levied against Ripple for its alleged violations. One of the well-known members of the XRP community, Prosperity Fund, took to X to share his views regarding Ripple vs SEC.
🚨Breaking: Another District Court Judge Rules Secondary Sales of #Crypto on Exchanges ARE #Securities, Similar to #LBRY ruling, & NOT LIKE #Ripple #XRP ruling…Conclusion: #SEC will Not Settle $XRP case with Ripple, at least until the 2nd Circuit Possibly Rules in Ripple’s…
— Prosperity Fund (@prosperity_fund) March 4, 2024
Legal Experts Weigh In
As the legal community closely watches these developments, top legal experts like John Deaton, who has announced his candidacy against Senator Elizabeth Warren, have opined that the Second Circuit is unlikely to overturn Judge Torres’ decision.
Deaton’s perspective underscores a belief in the robustness of the original ruling, suggesting that even if an appeal led to a remand, the outcome would likely remain unchanged.