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SEC vs XRP: Lawsuit Fast Track “Could Favour Ripple”

Last Updated May 1, 2024 11:54 AM
Teuta Franjkovic
Last Updated May 1, 2024 11:54 AM
By Teuta Franjkovic
Verified by Peter Henn
Key Takeaways
  • The ongoing Ripple vs. SEC lawsuit could potentially favor Ripple, considering recent legal interpretations.
  • They claim a judge has already dismissed similar objections and favors Ripple.
  • An attorney suggests a penalty for Ripple far lower than the SEC’s initial request.
  • The case has been expedited after both parties applied to fast-track the hearing.
The trial between Ripple and the US Securities and Exchange Commission (SEC) has already started, with numerous industry participants expecting to see the end of the lengthy legal battle. Instead of a resolution, though, the spat keeps offering additional confrontation.
The ongoing Ripple vs. SEC lawsuit could indeed favor Ripple due to its recent legal interpretations and strategic approaches. Indeed, with both parties arguing to fast-track the case, a resolution could arrive sooner than expected.

SEC Rejects Ripple’s Challenge to Expert Witness Testimony

Most recently, the regulator filed its opposition  to Ripple’s motion to strike new expert materials. The endeavor focuses on a testimony from witness Andrea Fox (known as the “Fox Declaration”). Ripple previously argued that the declaration represents an unsolicited expert opinion.

The SEC countered Ripple’s objections, describing the testimony as “standard summary evidence in support of calculations for disgorgement”. They argued that this type of evidence is routine and appropriate for quantifying financial remedies in legal proceedings.
The SEC said :
“It’s not an expert report, does not rely on specialized experience, and does not render any opinions at all, let alone an “expert” one. Nor does it present the testimony of a percipient witness. Rather, it applies basic arithmetic to Ripple’s financial records to streamline the presentation of the evidence to Judge Torres The court should deny Ripple’s motion.”

SEC Doubles Down on Disputed Testimony in Ripple Case

The agency further argued that the Fox Declaration  included information taken from documents that Ripple itself generated, such as tax returns and financial statements. The SEC emphasized that this data was crucial for determining the appropriate financial consequences in the case, reinforcing the relevance and utility of the declaration in shaping the trial’s outcome.

The SEC also pointed out that Federal Judge Torres had previously dismissed similar objections raised by Ripple and could be judging in favor of the company. This reminder serves to reinforce the SEC’s position that the issues Ripple continues to contest have already been considered and ruled on by the court.
According to the Commission:
“As Judge Torres did at summary judgment, the Court here should overrule Ripple’s objection to the Fox Declaration.”

Attorney Anticipates Summer Settlement

The latest update in the Ripple vs. SEC case was reportedby James K. Filan , a defense attorney and former federal prosecutor. In the comments under his post, many users argued that the regulator’s recent actions were an attempt to delay the resolution of the case.

Conversely, American attorney Jeremy Hogan is optimistic about a swift resolution, anticipating that the lawsuit will officially close this summer. He speculated about a possible $100 million settlement, which is significantly lower than the $2 billion initially sought by the SEC from Ripple but ten times more than what Ripple proposed.

Hogan said :

“I’m saying that the Judge will order 0 disgorgement but throws the SEC a bone and orders Ripple to pay a $100 million penalty.”

Aggressive Defense Strategy and Crypto Implications Could Favor Ripple in Landmark Case

The ongoing Ripple vs SEC lawsuit could potentially favor Ripple, especially considering recent legal interpretations and strategic maneuvers. Ripple has consistently maintained that XRP does not meet the criteria of the Howey Test for being considered a security, primarily arguing that there is no investment contract involved. The SEC, however, has argued that the “investment of money” criterion is met in the case of XRP​.

Interestingly, the legal battle has seen Ripple adopt an aggressive and public defense strategy against the SEC’s charges, rather than settling quietly, which is more typical of such cases. This has included hiring high-profile legal experts, including former SEC personnel, to strengthen its defense. Ripple’s stance is that XRP is a currency with utility, which differentiates it from typical securities​​.

Moreover, Ripple’s approach might be buoyed by the broader implications of the case for the cryptocurrency industry. A potential ruling favoring Ripple could set a significant precedent for how other cryptocurrencies are treated under US securities laws. This could lead to a more defined regulatory environment for crypto assets​.

Given these points, there is a sense among some legal observers that the resolution could indeed lean in favor of Ripple, potentially reshaping the regulatory landscape for cryptocurrencies in the United States. However, with the SEC known for its rigorous enforcement actions, the outcome remains uncertain and highly anticipated.

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