Could the SEC be preparing to offer Ripple a settlement deal?
Key Takeaways
- A private SEC meeting has fueled speculation that the agency could be ready to settle with Ripple.
- Cardano founder Charles Hoskinson has come under fire from the XRP community.
- The Basel Committee on Bank Supervision (BCBS) found that XRP is the third-most popular cryptocurrency among large banks.
More than a decade since its inception, the Ripple payment system and XRP Ledger (XRPL) are among the most widely adopted blockchain technologies around. But even now, the platform’s future remains uncertain. For XRP, both good and bad news tend to influence prices accordingly, and even rumors can trigger market movements
Dec. 1: SEC Meeting Spurs Ripple Settlement Rumors but CLO Thinks Firm Can Win in Court
In Ripple Labs’ ongoing legal battle with the U.S. Securities And Exchange Commission (SEC), 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 was 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.
On November 30, SEC Commissioners held a closed-door meeting with other senior staff members, with many in the XRP community speculating that they discussed a potential settlement in the agency’s lawsuit against Ripple. But the firm’s Chief Legal Officer Stuart Alderoty thinks it might not need to settle out of court.
Read the full story here.
Nov. 29: Cardano’s Hoskinson Brushes Off Claims He Took Sides Against XRP
Charles Hoskinson, the founder of Cardano, has ignited a small storm among some members of the crypto community.
In a recent live AMA video, Hoskinson railed against the unfair treatment of different crypto tokens by the U.S. Securities and Exchange Commission (SEC), claiming that Bitcoin received unfair and preferential treatment from the regulator.
Accusing Hoskinson of taking sides, the XRP community questioned why he didn’t make the same defense for other tokens and pointed out that he previously backed the SEC when its decisions favored Cardano (ADA)
Read the full story here.
Nov. 22: Big Banks Double Down on Ripple, Report Shows
The Basel Committee on Bank Supervision (BCBS) has released a report highlighting the trend of major banks’ rising confidence in cryptocurrencies, particularly XRP.
As part of the Basel III monitoring exercise, the study explores how some of the world’s leading financial institutions are experimenting with and actively integrating crypto assets like XRP into their operations.
After Bitcoin and Ether, the BCBS found that XRP was the third-most-popular crypto asset held by the banks surveyed.
Read the full story here.
Nov. 27: Ripple Kicks off First Ever XRPL Hackathon in Tokyo
Hackathons have long helped spur innovation in the field of decentralized finance (DeFi), bringing together a variety of developers, and designers to focus on specific challenges and opportunities.
On Sunday, November 26, an event in Tokyo inaugurated the first-ever hackathon for XRP Ledger (XRPL) developers. Supported by Ripple and other key players within the ecosystem, competition winners will each receive a share of the Hackathon’s $10,000 prize pool.
Hackathon Opens to XRPL & EVM-Compatible Sidechain Devs
With a December 10 deadline, XRPL developers are invited to submit designs for decentralized applications (dApps) and smart contracts.
The XRPL Hackathon is divided into 2 streams, one focused on the main chain and another oriented toward the recently launched Ethereum Virtual Machine (EVM)-compatible sidechain .
For the main XRPL track, the top prize is $4,000, with the second and third-place entries taking home $2,000 and $1,000 respectively. The remaining prize money is divided between a $1,500 prize for the winner of the EVM sidechain track and $1,500 for other participants.
The competition will be judged by Ripple Vice President Emi Yoshikawa, alongside 2 leading XRPL developers.
The winners are expected to be announced during a demonstration day showcasing entrants’ submissions on December 12.
Nov. 21: Over 1,500 Crypto Projects Are Building with Ripple’s XRPL
Predating Ethereum by several years, the XRP Ledger (XRPL) is one of the oldest blockchain networks and the core technology underpinning Ripple Labs’ various products, as well as a range of decentralized applications (dApps).
Since its inception in 2012, the platform has grown from an initial focus on payments to a diverse ecosystem of dApps spanning decentralized finance (DeFi), gaming, security and other use cases. Now, after years of sustained growth, XRPL supports more than 1,500 dApps.
Why dApp Builders Choose XRPL
From its inception, XRPL’s developers positioned the blockchain as a more streamlined alternative to Bitcoin, oriented toward institutional use cases that require a much higher throughput.
For example, while Bitcoin’s mining rewards incentivize participation in the network, XRPL validators receive no compensation for their work. As a result, although anyone can run a Ripple node and contribute toward the blockchain’s consensus, there are currently only 122 XRPL validators.
In contrast, blockchain networks like Bitcoin and Ethereum, which support mining and staking respectively, are estimated to consist of tens or even hundreds of thousands of nodes at any one time.
Advocates of incentivized consensus mechanisms argue that they support greater decentralization, preventing any single party from gaining too much influence.
Nevertheless, over 1,500+ dApp projects have clearly deemed XRPL sufficiently decentralized. But why?
Today, Ripple Labs itself only runs a single XRPL validator. The rest are operated by various public institutions, businesses and individuals that have a stake in the platform. Because fewer validators need to approve each transaction, XRPL is one of the more efficient blockchain platforms.
Use Cases Expand Beyond Payments
Thanks to its efficiency advantage, developers have explored a wide variety of XRPL use cases.
Initially designed to power cross-border money transfers, payments have always been central to XRPL. From its interbank payment solutions to its recent pivot to CBDCs, Ripple Labs remains focused on technologies that enable the movement of currency around the world.
But these days, the broader XRPL ecosystem encompasses a much more varied assortment of dApps and services. From NFT marketplaces like XRP Cafe to gaming projects like Ledger City to other novel platforms such as the Web3 music streaming service Audiotarky , the blockchain now supports a diverse array of projects.
Nov. 14: SEC vs. Ripple: Judge Torres Sets Schedule for Next 6 Months
After Ripple Labs and the US Securities and Exchange Commission (SEC) submitted a plan to the court outlining how they intend to negotiate remedies, Judge Torres has now handed them a schedule for the next 6 months.
The schedule follows Judge Torres’ July decision, which ruled that Ripple was guilty of breaching US securities law when it sold XRP tokens directly to institutional clients. Now, as the opposing sides prepare to bash out the details of any remedies, followers of the case are speculating as to the size of the disgorgement Ripple could be liable to pay
Ripple Faces $770M Penalty Over Institutional XRP Sales
The recently announced schedule follows Judge Torres’ July decision, which ruled that Ripple was guilty of breaching US securities law when it sold XRP tokens directly to institutional clients.
As the opposing sides prepare to bash out the details of any remedies, followers of the case are speculating as to the size of the disgorgement Ripple could be liable to pay
According to crypto lawyer John Deaton, who has emerged as a leading analytical voice throughout Ripple Labs vs. SEC, the regulator could pursue a fine of up to $770M, but the actual amount paid by the American crypto firm is likely to be much less once legal fees are deducted.
Judge Sets April 29 Deadline for Final Submissions
According to a timeline sent to both parties on Monday, November 13, the SEC has until March 13 to file its proposal for a penalty. Any evidence either side wishes to present in court must be submitted a month earlier.
Once the SEC submits a proposition, Ripple will have a month to file its objections and argue the case for a lesser penalty.
After Ripple files its opposition, the SEC will be given two weeks to respond, leading to a final deadline of April 29, 2024, for the conclusion of arguments.
Nov. 13: AI-Driven Deepfake of Ripple CEO Shows Sophisticated Scam
As Artificial Intelligence (AI) has evolved, scam artists are increasingly using AI-generated “deepfakes” to impersonate real people.
In the latest instance of the trend, a video that appears to feature Brad Garlinghouse has been doing the rounds on YouTube. However, upon closer inspection, the video doesn’t star the Ripple CEO, but his AI-generated doppelganger.
XRP Users Cautioned Over Deepfake Garlinghouse Video
If Brad Garlinghouse asked you to send him XRP, promising to double the value of any transaction, you might think the offer was too good to be true.
But then again, why would he lie? As a public figure, Garlinghouse would be unlikely to endorse a crypto scam. And of all the people who might possibly promote a lucrative XRP scheme, surely the CEO of Ripple Labs is the most trustworthy.
But appearances can be deceptive. And on the internet, the old saying has never been more evident than in the context of ever-more convincing deepfakes.
In the latest viral deepfake scam, Brad Garlinghouse’s likeness appeared on a YouTube ad that linked to a website set up to receive XRP payments.
“Send a minimum of 1000 XRP and a maximum of 500,000 XRP to the address listed on the website,” deepfake Garlinghouse directs viewers. “You will receive back double the XRP” he then promises, claiming the reward is “our way of giving back to the community.”
Only a close viewing of the video reveals Garlinghouse’s out-of-sync lip movement — a telltale sign that it is generated by AI. But for many YouTube viewers, the footage is uncomfortably convincing.
Platforms Criticized for Deepfake Response
While YouTube did not immediately respond to CCN’s questions, it isn’t the first time the website has been in hot water for allowing deepfake scams to circulate.
Back in 2020, Ripple sued YouTube for failing to protect users from exactly the kind of fake videos that continue to appear on the platform today.
“For every scam, giveaway, fake conspiracy that is taken down, multiple more pop up nearly immediately,” Ripple said at the time.
“YouTube and other big technology and social media platforms must be held accountable for not implementing sufficient processes for fighting these scams.”
The crypto sector is especially vulnerable to the risks posed by deepfakes. In an industry where facial and voice recognition techniques are widely used to verify users’ identity, fraudsters are increasingly using generative AI to dupe platform’s know-your-customer (KYC) controls.
According to recent research, in the past year, crypto platforms reported a 128% increase in the use of deepfakes during KYC verification processes.
Since 2022, the number of fraudulent accounts using AI-generated identity documents jumped from 20% to 30%, the report observed. In contrast, during the same period, fraudsters’ use of stolen documents declined from 53% to 36% of all reported cases.
Nov. 10: Ripple, SEC Submit Joint Schedule for Remedies, Discovery & Briefing
Since it was first slapped with a lawsuit from the regulator in 2020, Ripple Labs has been locked in a fiercely contested legal battle with the US Securities and Exchange Commission (SEC). But nearly three years after the first punch landed, SEC vs. Ripple Labs could finally be drawing to a close.
In a letter submitted to the court on Thursday, November 9, both parties outlined an agreed-upon schedule for the next three months that will see lawyers for both sides meet at the negotiating table.
Opposing Sides to Discuss Remedies for Securities Law Violation
In a July ruling, Judge Analisa Torres found Ripple Labs to be guilty of violating securities law by selling XRP tokens directly to institutional investors. Going forward, the two parties will negotiate over the size and nature of the penalty Ripple needs to pay.
As stated in the latest court documents, the SEC intends to present new information (discoveries) during the upcoming negotiations which it discovered after initially filing the lawsuit.
For its part, Ripple has agreed to a 90-day timeline for the discussion of remedies. However, the company reserves the right to object to the SEC’s presentation of fresh evidence, in which case it may petition for an extension to the deadline.
Further Appeals Threaten to Drag the Case Out
Although Judge Torres sided with the SEC regarding Ripple’s institutional XRP sales, with regard to other charges, she handed the firm a crucial victory.
As things stand, the court ruling deemed that Ripple’s sales of XRP on crypto exchanges and its use of the token to pay contractors were within the bounds of the law. But the SEC could still appeal that decision.
During a recent appearance at DC FinTech week, Ripple CEO Brad Garlinghouse said, “We are in it till the end,” stressing that the company would continue its legal battle all the way to the Supreme Court if necessary. However, he didn’t rule out the possibility of settling the matter out of court.
Nov. 9: Ripple Metaco Solution for HSBC Bolsters Digital Asset Custody Services
Many people associate the phrase “digital asset custody” with consumer cryptocurrency wallets. But for the Ripple subsidiary Metaco, providing enterprise-grade custody solutions for banks and financial service providers means handling a diverse variety of digital assets.
For instance, having recently forged a partnership with HSBC, Metaco is developing a new custody service that will complement the bank’s tokenized securities offering and a new tokenized gold platform.
Metaco Collaboration Points to Banks’ Demand For Digital Asset Custody
As tokenization has gained traction in recent years, some of the world’s largest banks have lined up to plant their flag in the field.
Joining a wave of bank-led asset tokenization initiatives that includes UBS Tokenize and JPMorgan’s Onyx Digital Assets, in 2022, HSBC launched its tokenized private blockchain infrastructure – HSBC Orion.
As banks have embraced on-chain digital assets, their need for secure, reliable custody solutions has been a major boost for specialist providers like Metaco.
In a press release announcing the collaboration, HSBC’s Chief Digital, Data, and Innovation Officer, Zhu Kuang Lee, explained that “next-generation custody infrastructure” is needed to keep up with the growing demand for digital asset services.
What’s more, with trading on HSBC Orion set to go live in 2024, the bank has also expanded its digital asset offering to include a wider range of asset types.
HSBC Enters The Tokenized Gold Market
In a recent podcast , HSBC’s Head of Digital Assets Strategy John O’Neill said that Orion would initially focus on the bond market. Looking ahead, however, he recognized the potential for tokenizing physical assets.
Pointing to diverse applications of blockchain technology such as the use of digital tokens to represent physical artworks, O’Neil said that tokenizing bonds was just the first step, but “who knows where the journey will take us in time.”
While the tokenized art market isn’t in HSBC’s immediate line of sight, on November 1, a range of gold-backed tokens launched on the HSBC Evolve trading platform. Each token represents 0.001 troy ounces of physical bullion held in the bank’s London vault, promising to transform the way its customers excess precious metal investments.
HSBC has since confirmed that the service Metaco developed will support tokenized gold custody.
Metaco Boosts Ripple’s Banking Sector Footprint
While it was already a key technology partner for banks like Santander, since acquiring Metaco for $250M in May, Ripple has further expanded its footprint in the global banking sector.
With proprietary blockchain solutions like HSBC Orion gaining ground, Ripple’s XRP Ledger might never become the global payment infrastructure its proponents envision.
But even if the company’s core product offering never attains mass adoption, Ripple’s pivot toward alternative technologies like CBDCs has helped it secure a foothold outside its traditional stomping ground. Meanwhile, the firm’s acquisition of Metaco has given it a stake in another crucial aspect of the world’s financial infrastructure: asset custody.
