XRP Lawsuit Update
In the latest XRP lawsuit twist, the US Securities and Exchange Commission (SEC) has received backing from sports investment organisation New Sports Economy Institute. The NSEI filed an amicus brief on Friday in the continuing dispute between the SEC and Ripple Labs Inc.
In the amicus brief, NSEI compared cryptocurrencies to a "chameleon engaged in regulatory arbitrage, identifying themselves as assets when it wants to attract money and pleaded to 'investors,' but a currency when it confronts regulatory scrutiny".
"This flip-flopping is deceptive but also unlikely," claimed NSEI.
Even if the Court finds XRP to be more of a currency and less of a speculative asset proxy, that will make it an exception rather than a rule. Any ruling in the XRP lawsuit like that should be constructed to avoid significant harm to future crypto speculators, who, in all likelihood, aren't even aware that they aren't investing in the first place, NSEI stated.
The SEC filed a complaint against Ripple and its officials in December 2020, stating that the sale of XRP represented an issue of unregistered securities worth more than US$1.38 billion.
XRP lawsuit: Coinbase amicus brief
Coinbase, a cryptocurrency exchange in the US, has formally filed an amicus brief in favour of Ripple Labs Inc. in the case launched by the SEC in 2020. Coinbase, which claims to be the largest crypto trading platform in the US by trade volume, filed a brief in support of Ripple's fair notice defence on Monday.
The Court should "deny the SEC's petition for summary judgement on this issue to guarantee that the current due process precedents on which the fair notice argument is based continue to safeguard against unlawful regulatory enforcement when warranted", Coinbase argued in the filing.
According to Coinbase, government bodies cannot condemn activity as a breach of the law unless fair notice is provided. It adds that by prosecuting sellers of XRP tokens after making public remarks suggesting that those transactions were legitimate, the SEC has lost sight of this foundational principle.
XRP lawsuit: Likely verdict
According to the CEO of Ripple (XRP), the SEC litigation might go on for another three months. However, many legal experts believe Ripple will prevail because the SEC has yet to give any substantial proof.
According to legal experts, the SEC's chances of winning the lawsuit have dwindled even more. According to Roslyn Layton, senior analyst at Forbes and senior vice president at Strand Consult, "signs" of a "brutal loss" for the SEC are mounting. The SEC could not establish that Ripple and XRP investors were conscious of, or should have known, the token's claimed position as a security.
According to Layton, the participation of tens of thousands of XRP investors represented by attorney John E Deaton caused the SEC's case to crumble at last.
Despite dismissing the motion to intervene, Judge Torres allowed the filing of amicus papers, "sending a strong message to the SEC that she would be listening". An affidavit was presented by more than 3,000 XRP investors from Deaton's group of over 75,000.
Verret believes that if the SEC files an appeal with the Supreme Court, it will be defeated. If the SEC concludes that XRP is not a security, Ripple has already agreed to pay a charge. Currently, though, a resolution looks improbable.
XRP lawsuit: General consensus
The crypto community has rallied around Ripple since the case was filed in 2020, with more than a dozen firms filing amicus curiae filings in support. Whereas most Ripple supporters say that securities regulations have been improperly used to create uncertainty for the whole sector, the regulator maintains that "most" cryptocurrencies are securities.
However, CryptoLaw's John E. Deaton cautioned against drawing any conclusions from the Ripple action, implying that the Court may decide otherwise.
Author: Emmanuel Baiden
7 years experience within the financial services sector most notably in Sales, Trading, research and writing articles within the crypto space. I have a bachelor's degree in International Business and a Master's in Investment and Risk Finance . I am also an associate member of the Chartered Institute for Securities and Investment.