The long-standing legal battle between the US Securities and Exchange Securities Commission (SEC) and Ripple Labs seems to be nearing its end. After the dismissal of the SEC’s claims against Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen, it is expected that both parties will proceed to finalize a settlement. However, pro-XRP legal expert John Deaton believes that a resolution has yet to be seriously discussed between the SEC and Ripple executives.
The SEC’s Demands
According to Deaton, the SEC is “pissed and embarrassed” and is seeking a hefty $770 million fine for Ripple’s violation of securities laws. The penalty phase of the settlement is not as straightforward as it may seem. It is similar to a second case, involving further legal procedures such as depositions, interrogatories, document production requests, and the examination of emails, bank statements, contracts, and ODL transactions.
Ripple, on the other hand, aims to significantly reduce the imposed fine. To achieve this, they will seek to exclude ODL transactions from the penalty, arguing that they were institutional sales and therefore not in violation of securities laws. This defense strategy will add another layer of complexity to the settlement negotiations.
Deaton draws attention to the SEC’s case against LBRY, a decentralized content-sharing platform. It took eight months of additional litigation before the Judge ordered LBRY to pay a fine of $111,614 to the Commission. This case serves as a reminder that settlements are rarely straightforward. Both parties had to file multiple briefs and undergo depositions. Considering this precedent, it is unlikely that a final judgment from Judge Analisa Torres will be reached until late summer at the earliest. In fact, it could take up to a year before either the SEC or Ripple has the opportunity to file an appeal.
Deaton also highlights the potential role of Coinbase’s Motion To Dismiss (MTD) in the SEC-Ripple lawsuit. If Judge Failla grants the motion and dismisses the SEC’s case against Coinbase, it would force the Commission to reassess its stance on cryptocurrency and potentially consider a settlement with Ripple. However, if Coinbase loses its MTD, the likelihood of a settlement diminishes. Coinbase argues that the SEC lacks jurisdiction over its activities, which adds an additional layer of complexity to the overall legal landscape.
As the SEC and Ripple Labs move closer to a settlement, the path ahead remains uncertain. Both parties have high stakes and differing demands, making a resolution challenging to reach. The outcome of Coinbase’s MTD could have a significant impact on the trajectory of the case and the possibility of a settlement. Only time will tell how this legal saga unfolds and what it means for the future of Ripple and the crypto industry as a whole.