Ripple’s court battle with the United States Securities and Exchange Commission has recently seen new developments that, according to some observers, could foreshadow an impending resolution of this massively consequential case. Feb. 17 marks the deadline for Ripple to unseal a series of 2012 documents whose contents will likely sway the opinions of both the court and the public toward either one side or another. In another plot twist, the court’s decision to treat some of the SEC’s documents as open to discovery could set a groundbreaking precedent for similar cases involving U.S. executive agencies. Here is where things stand ahead of the next round of the showdown.
The SEC’s lawsuit against Ripple Labs Inc., filed on Dec. 23, 2020, alleges that the company raised upward of $1.3 billion by selling the XRP token without registering it as a security, which is what the agency considers it to be. Ripple’s argument is that XRP is a tool that facilitates international payments rather than an unregistered investment product and that the agency’s jurisdiction does not extend to the token and its sales.
This is not the first lawsuit against a digital asset issuer that the securities regulator has brought. However, the vast majority of such cases end in a settlement instead of going to trial. In this scenario, individual crypto firms yield to the SEC’s demands and pay penalties to be let go. The regulator’s case never reaches the stage where it can be scrutinized by a judge or a jury panel. No precedent for similar cases in the future is set.
Unlike many others, Ripple chose to go all the way and get into a legal fistfight. If the SEC scores a W, court precedent will reinforce the agency’s claim for regulating much of the crypto
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