SEC Vs Ripple: Could XRP Case Go To Trial?
Although a trial is still a possibility, insiders anticipate a resolution in the protracted SEC lawsuit against XRP within the next month. Let's investigate further.
SEC claimed in 2020 that two of Ripple Labs' executives and the blockchain company generated more than $1.3 billion in 2013 by selling the cryptocurrency XRP in an unregistered securities offering. In order to avoid a trial, US District Judge Analisa Torres, who is presiding over the case, might rule in favour of either party or submit it to a jury.
SEC increased its regulation via enforcement more recently after announcing in May last year that it would hire 20 new employees for its Crypto Assets and Cyber Unit, which is part of the commission's enforcement division. According to several trustworthy sources, the agency is looking to expand its workforce now that those positions are largely filled.
According to Matthew Sigel, head of digital assets research at fund manager VanEck, "we have to assume they are gearing up for trials if necessary, including in the Ripple case," given the litigious inclinations of the current SEC leadership and news reports about additional attorneys being hired in the enforcement division.
According to Toby Galloway, chair of the Winstead law firm's securities litigation and enforcement practice area, the lawsuit might not go to trial. According to Galloway, SEC and Ripple have sought summary judgement — a decision reached based on statements and evidence without going to trial — by asserting there are no genuine questions of material fact. Galloway said:
“When both sides agree that there are no fact issues, it becomes more likely that the court will grant a summary judgment for one side or the other, but it is possible that the court could disagree and decide that there are disputed fact issues that must be decided by a finder of fact at a trial.”
How will the court react?
SEC is requesting injunctive action against Ripple in this case, a remedy that prevents someone from doing something or forces them to act in a specific way.
According to Marc Powers, an adjunct professor of blockchain law at Florida International University and a former leader of Baker & Hostetler's securities law practise group, injunctions should only be granted when the defendants are likely to continue their offences.
He said that the Financial Crimes Enforcement Network (FinCEN) has previously pursued Ripple. It said in 2015 that by operating as a money services company (MSB) and selling XRP without registering with them, Ripple had violated key provisions of the Bank Secrecy Act (BSA).
Ripple consented to register as a money services firm with the authorities and pay FinCEN a $700,000 fine.
"Given this context and the manner in which the SEC is claiming breaches here,... According to Powers, I believe the court may rule that either there was no breach of the registration rules or they would not give the injunction.
Powers predicted that the matter would proceed to trial, where a jury would determine whether or not the defendants had properly registered their securities. But even so, he said, the court would decide whether or not to grant an injunction.
Ripple and the SEC can still provide Torres with fresh evidence in their pleadings. The decision of the lawsuit will have a significant impact on crypto regulation.
Related:
Trending
