The United States Securities and Exchange Commission (SEC) launched legal action against Ripple Labs and its two executives in December, claiming that the XRP coin was actually a security and that the firm raised over $ 1.38 billion in unregistered securities offerings in 2013. Many people wondered if XRP could survive.
Some exchanges have removed XRP from the list, some asset managers have sold XRP tokens. XRP had lost its place as the top 3 currencies by market capitalization and even seemed to fall from the top 10. However, reports of Ripple’s downturn were extraordinarily exaggerated.
As of mid-April, XRP has increased by 532% over the past year. Lately, things have taken a positive turn in the SEC case as well, with defendants winning two discovery decisions, even gaining access to SEC’s internal notes and minutes on the crypto controversy, reversing things at the regulator. “The SEC is currently on the defendant chair and it knows about it,” Forbes commented on the matter.
But the case is still pending, being really closely watched, and has the potential to set legal precedents in a number of areas. Daniel Payne of Murphy & McGonigle law firm explained to Cointelegraph what he thought might set a legal precedent as a result of the lawsuit, including:
“The application of restriction status to token sales, cross-border access by securities laws to token sales on blockchains around the world, to digital assets regulated by securities laws as FinCEN’s virtual currency [eg. BTC] implementation and whether courts will use Bitcoin and Ether as models of non-securities digital assets in their legal analysis. “
Although Ripple Has Gained Advantage in Pre-Trial Decisions, Can It Be Said That Ripple’s Legal Problems Are Over?
Carol Goforth, a law professor at the University of Arkansas, told Cointelegraph, “It’s not even close”. “Ripple did a good job accessing the SEC’s insights on cryptos (ie the initial discovery decision). And in the second challenge: Ripple executives Garlinghouse and Larsen made a plausible argument that the SEC’s eight-year demand for personal bank records was a cross-border request. As corporate officials argue, does the SEC need to know household spending in order to demonstrate its purpose? “
“But although Ripple can find information to help its defense as a result of this ‘win,’ it is not certain how important it will be in the long run,” Goforth continued. Daniel Payne; “The playing field of the case has changed in the last two reconnaissance decisions, the defendants have started to fight with some important arguments, but that does not mean that they won the case.”
David Chase, a securities lawyer and former SEC enforcement attorney, told Cointelegraph, “It is extremely hasty to make any guesses from this interim decision, they are really discovery disputes and not going to the heart of the case.”
Attorney JohnWagster told Cointelegraph: Ripple’s victory in the first round does not mean he won the match. “The final decisions of the US District Court are definitely positive for Ripple, but the game is not over yet. SEC always tends to choose cryptocurrency targets carefully. ”
“When the SEC decides to move forward with a high-profile sanction action, it will be a shame for them to back down without some sort of victory. I expect them to fervently continue their claims against Ripple. ”
There was a time when people thought Ripple Labs, not Coinbase, would be the first cryptographic firm to be listed by a major US Stock Exchange. Coinbase went public on the Nasdaq exchange last week with a good offer that led to comparisons with those of Facebook and Airbnb. Perhaps Ripple’s destiny is not to make historic waves on Wall Street, but to help clarify the rules that will prevail in the courts, the expanding crypto universe.