Ripple has been embroiled in a lawsuit with the SEC for more than 1.5 years. After a long and uncertain period for Ripple and the entire crypto world, there finally seems to be light at the end of the tunnel. How? You can read about that in this blog.
Table of Content
- Why has Ripple been sued by the SEC?
- How will the lawsuit come to an end?
- Will there be a final ruling in the Ripple lawsuit?
Why has Ripple been sued by the SEC?
Back to the beginning for a moment. In December 2020, the SEC, sued Ripple, alleging that XRP was not a cryptocurrency but a security. A security is a tradable right that represents a financial value. Examples include stocks, bonds and options. Ripple would therefore fall under US federal securities laws. The reason: According to the SEC, Ripple would not properly explain why they do not have to register sales of XRP. As a result, Ripple would not comply with federal securities laws. The sale of XRP would therefore be forbidden without permission from the SEC. Ripple disagrees with the reasoning and distances itself from it, claiming that they are not a security. They do see themselves as a crypto. The SEC did register Bitcoin and Ethereum as a cryptocurrency, exempting them from securities laws.
The lawsuit has created a lot of uncertainty within the crypto world. For instance, we saw the price of XRP fall by more than 72% after the lawsuit. Since then, there have been developments in the lawsuit that made people trust Ripple again. In 2021, we saw Ripple refute the SEC's allegations. Ripple's lawyers came up with evidence as to why Ripple is indeed a cryptocurrency. One of the proofs: XRP is recognised as a virtual currency by regulators in the UK, Japan and Singapore.
In addition, Ripple's lawyers filed a motion , stating that the SEC should share information, on why Ethereum has been recognised as a cryptocurrency in the past. The court granted the motion and asked the SEC to share the required information. The SEC refused and filed its own motion, asking that Ripple's motion be denied as it is a different matter. Judge Analisa Torres rejected the motion, concluding that the SEC was out to delay the lawsuit. This ruling was seen as a victory and led to greater confidence in a positive outcome for Ripple.
How will the lawsuit come to an end?
The lawsuit may now come to an end. Indeed, both sides have filed a motion asking for an expedited ruling. The motions are called "summary judgment" and are often filed when the parties believe there is enough evidence to reach a correct conclusion.
Analisa Torres has thus been called upon to come up with a ruling within a short time. So we will finally find out whether Ripple is in violation with its sale of XRP. Ripple remains convinced that there is not enough evidence, while the SEC remains behind their conviction.
For Brad Garlinghouse (Ripple's CEO), the SEC's summary judgement says it all. According to him, the SEC knew all along that they would not win this lawsuit, but used the lawsuit to expand their jurisdiction.
The crypto world is eagerly awaiting the ruling. Since Ripple is a big name in the crypto world, the ruling could have a lot of impact on the rest of the market. If XRP is judged a security, then more cryptocurrencies will be considered a security. If not, this is a victory for the entire crypto world.
Will there be a final ruling in the Ripple lawsuit?
It is not clear when the final verdict will be. Some claim as early as within months, but Ripple lawyer John Deaton, does not expect a settlement. Legal experts expect the trial to conclude around March 2023.
The news that the soap opera appears to be coming to an end at all has had a positive effect on XRP's share price. Indeed, last week the share price rose by over 18%. The rise continues this week as well. On Twitter, major accounts like David Gokhshtein shared that they expect a price rise across the crypto market if Ripple wins the lawsuit. Currently, XRP is up over 50% on a weekly basis. So there is a lot of confidence in a good outcome at the moment.