Initially, the Ripple case looked like it would go in favor of the SEC. The XRP market crashed overnight, exchanges delisted the asset, market sentiment turned against Ripple, and critics began calling doom for the company. But in the six months since then, Ripple has made a huge comeback. As a result of all these developments, the case may end in a settlement. So what would this look like?
Jeremy Hogan, a beloved lawyer in the XRP community, analyzed in his latest video what could happen if such a deal happens.
In the past three years, the SEC has filed several dozen lawsuits against crypto companies. Most companies acted quickly to settle with the regulator. For some, it was because they didn’t have the resources to fight the SEC. Others were because they knew they were breaking a law.
Kik Interactive and Telegram (interestingly, both were instant messaging companies before they got into crypto) are two companies that went head-to-head with the SEC. They both lost and eventually had to settle. According to Jeremy, Ripple is most likely going that route.
Taking lessons from Kik and Telegram, Jeremy outlined three things Ripple would like to take from the deal.
What Ripple needs
The first thing to look at for Ripple is if it can continue its business. Some crypto companies, such as Paragon Coin, were disabled by the SEC and had to cease operations.
If a penalty is imposed or profits from sales are to be distorted, it must be at a level that will not bankrupt the company… Whatever figure we see in this deal, it will be something Ripple can afford.
The second thing Ripple will be out of is clarity moving forward. Ripple and the secondary market should know that the SEC debacle is behind this. According to Jeremy, the SEC will never agree to drop all future charges against the secondary market (exchanges) for XRP securities breach.
However, the regulator may make it clear that “sales resulting from filing forward litigation are not sales of securities.”
Another solution is for Ripple to sell escrow XRP directly to accredited investors and/or companies. It can do this by selling XRP to on-demand liquidity (ODL) clients. These are usually banks and payment processors.
If the two agree to such a deal, XRP could soon return to exchanges.
…The next effect will give exchanges confidence to relist XRP. They just need a little push and I’m sure a deal as stated will lead to XRP token relisting.
However, the most important thing in such a deal is that Ripple will be the first crypto company to be clear about securities breaches.