Judge Torres’ verdict that Ripple broke the law when it sold XRP directly to institutional investors but not when it sold them on crypto exchanges is broadly recognized as a victory for the firm. But Ripple could be back to square one if the SEC appeals that decision. In such high-stakes cases, which have already cost both sides millions of dollars in legal fees, reaching a settlement is often in the best interests of both parties.
In a recent notice, the SEC announced plans for Commissioners and other staff to meet behind closed doors on Thursday, November 30.
Although private SEC meetings are fairly commonplace, the presence of such senior officials suggests this one was important. Moreover, the agenda references the settlement and resolution of SEC litigation, fueling speculation that Commissioners met to discuss the Ripple case.
On Thursday morning, rumors that Ripple would be represented at the meeting started circulating among the online XRP community.
Yet, despite certain influencers’ enthusiasm for the prospect, would settling the matter out of court be the best option for Ripple? If it continues the fight instead, Chief Legal Officer Stuart Alderoty seems to think the firm stands a good chance of victory.
Whatever they discussed in Thursday’s meeting, any settlement offer from the SEC would be unlikely to come cheap. After 3 years of legal wranglings, anything less than a hefty penalty would make it look like the agency had backed down.
Amid speculation that the SEC was preparing to offer Ripple a settlement deal, in a post on X, Alderoty said the agency “is anything but infallible,” citing a Wall Street Journal article about the agency’s poor track record in the Supreme Court.
As noted by the Journal, not only has the Supreme Court often ruled against the SEC, but it has increasingly moved to empower the people and businesses subjected to its administrative proceedings.
In the latest case to reach the Supreme Court – SEC v. George Jarkesy – the justices could potentially strike down the Commission’s ability to file enforcement actions outside of federal court.
According to the legal argument by Jarkesy – the SEC sued him for securities fraud – the agency’s in-house, administrative courts violate the Constitution’s separation of powers doctrine.
As the trial gets underway, the SEC’s lawyers are up against a Supreme Court with a conservative majority that is no stranger to restricting government agencies’ power.
A judgment against the SEC wouldn’t directly impact its case against Ripple, which is being held in an ordinary District Court. Nevertheless, as part of a general movement toward questioning the legal basis of the agency’s enforcement actions, Alderoty and his colleagues have good reason to cheer for Jarkesy.