How the SEC settled the case with EOS ?
EOS had to face a lawsuit due to a legal accusation filed against them by the Crypto Assets Opportunity Fund, this was due to the company’s IOC offering from June 2017 to 2018 of the same month. Later the Securities and Exchange Commission pressed charges for its IOC raising a market of 4 billion USD. The firm after years of stalling in the procedures of a lawsuit settled for a civil penalty of 24 million USD in 2019.
What is the link between these two cases ?
Yet again, we get to see the SEC put charges against the company Ripple Labs Inc. and its co-founders Brad Garlinghouse and Chris Larsen. They are alleged to have raised a market capital of over 1.3 billion USD through unregistered securities, at the beginning of 2013.
During December 2020, the Director of the SEC’s Enforcement Division Stephanie Avakian said,” Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies”. Quoting from the SEC.gov: “The SEC’s complaint, filed in federal district court in Manhattan, charges defendants with violating the registration provisions of the Securities Act of 1933”.
Although on 2nd July the XRP investors across the globe waited for a final episode of this prolonged legal affair, the court under judge Netburn announced three verdicts. Twisting and turning the events into a more interesting outlook the SEC requested the court for an extension of about 60 days or to say 2 months to conduct discovery proper evidence of the alleged crime.
The court in March already told the SEC that if they couldn’t produce any fair notice then any firm which would face similar cases in the future might use it in their defense. This, indeed this caused further stalling and evident fall in the price rate of several cryptocurrencies (even then, the world of crypto still sees some profits keeping Bitcoin at a rate no more than $40,000 and the price of XRP being at a rate of 0.86 USD). However, mass opinion celebrates this verdict as a minor victory for Ripple. This brings up a significant question, who exactly is up for the trial? – Is it the Ripple? Is it XRP? Or is it the actions of the SEC?
The defendant stated, the procedure of discovery of a fair notice has been continued for years now, if still, the SEC is unable to find anything against the company and the executives then what big deal will be solved in another 60 days? They had cooperated with the team of SEC and in this manner, Ripple had sent the SEC about 120,000 documents. These documents were said to have provided no help and were asked upon in the court to be returned duly to the defendant.
Is this after all a mere game of regulatory strategy?
It is interesting because it seems that the SEC seeks to have an upper hand here. This is because on the international stage it is evident that a race of technology is currently taking place between China and the US (Brad Garlinghouse and Chris Larsen). China seems to be winning in public right now but what about behind the veil… covertly USA is leading as they have the future of foreign crypto exchange, the XRP. Delaying and stalling this whole procedure will lead the court to conclude this around late 2021 or early 2022. That means prices will already explode. The first price then regulation or law will come into place.
Ripple also stated that the SEC has not shown good cause to extend the discovery and an extension will unduly detriment their business. They also stated that the SEC has done this previously to other firms. This is not an impossible or even difficult notion to accept as the company is a globally leading corporation, richly funded with trillions of investments put into it.
This stalling seems like a facade for the company to settle with a huge amount of fines or penalties. This might after all be a strategy considering circumstances of the past (not long ago). The USA wouldn’t make a mistake to take the company down is pretty clear (referring to the ongoing international competition). Only time and patience will bear the fruits of this event.