Pro-Crypto Lawyer Predicts No Settlement in Ripple vs SEC Lawsuit
The legal battle between blockchain company Ripple and the US Securities and Exchange Commission (SEC) rages on, with neither side backing down. According to pro-crypto lawyer John Deaton, the case is unlikely to be settled because SEC Chair Gary Gensler has no intention of settling with Ripple.
The crux of the problem is that if a settlement is reached, Gensler would have to publicly admit that XRP transactions, including those on the secondary market, are not securities, which he is unwilling to do.
Deaton went on to say that Ripple will only settle with the SEC if the regulator clarifies XRP and declares the crypto asset non-security. Members of the XRP community have asked Deaton if a settlement is possible, to which he has responded that neither Ripple nor the SEC will settle until Judge Analisa Torres rules on the case.
To settle charges brought by the SEC, Kraken, a major US cryptocurrency exchange, agreed to pay a $30 million fine and discontinue its staking service in February 2023. The SEC remains confident that it will succeed in its case against Ripple and has refused to consider settling with the blockchain company.
In December 2020, the SEC filed a lawsuit against Ripple, accusing it of failing to register approximately $1.4 billion in XRP cryptocurrency as securities. Ripple’s money transfer network is powered by XRP. If the SEC wins the case, it could have a significant impact on how crypto companies operating in the United States, as the federal agency would require most of the products they sell to be subject to strict reporting and registration rules that apply to securities.
The case is significant because it highlights a critical major split between the crypto industry and the SEC. Crypto companies argue that they are creating a transparent, decentralized financial ecosystem by using blockchain technology to store and transfer value, whereas the SEC believes that most cryptocurrencies should be regulated as securities because they are essentially investment contracts that promise a financial return to customers. The Ripple case will set the tone and direction for how the United States regulates cryptocurrency in the future.
Because the SEC has been chastised for failing to specify which cryptocurrencies and digital assets it considers securities, the Ripple case is expected to set a benchmark. Instead of engaging in dialogue with industry players, the agency has been accused of engaging in “regulation by enforcement,” which includes threats of legal action and lawsuits. The Ripple case will almost certainly have far-reaching implications for the US crypto industry, and its outcome will be closely watched by both crypto companies and regulators.