In the ongoing legal battle between Ripple and the United States Securities and Exchange Commission (SEC), a pro-XRP lawyer named John Deaton, who represents numerous XRP tokenholders, has outlined the potential steps that Ripple and the SEC may take if they decide to settle.
Deaton emphasized the significance of the Coinbase vs. SEC lawsuit, stating that if the judge in the Coinbase case grants the exchange’s motion to dismiss, it would suggest that token sales on the exchange are not subject to U.S. securities laws. However, this exemption would not extend to crypto staking.
According to Deaton, the only possible scenario for Ripple and the SEC to reach a settlement before the end of the year is if Judge Failla grants the Coinbase motion to dismiss or partially grants it, specifically finding that token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws. If this occurs, the SEC’s ability to appeal would be significantly limited, making a settlement a logical choice. Additionally, even if an appeal were possible in such a situation, the SEC’s authority would be diminished.
Ripple indicated in a filing on September 1 that the summary judgment did not address the legal basis for the interlocutory appeal. The company’s opposition stems from the argument that the SEC strayed from the established legal perspective, particularly regarding the application of the Howey test to XRP token sales.
The SEC initiated a lawsuit against Ripple, its CEO Brad Garlinghouse, and its co-founder Chris Larsen in December 2020, which led to several exchanges delisting XRP to avoid potential legal complications. However, after a positive ruling by Judge Analisa Torres in July, many exchanges expressed their intention to relist the token.
In 2023, the SEC has been targeting various cryptocurrency firms on allegations of securities violations, including Binance and Coinbase. Recently, asset manager Grayscale achieved a legal victory against the SEC through an appeal, which mandated a review of its application for a spot Bitcoin exchange-traded fund.
The outcome of the Coinbase vs. SEC lawsuit holds significant implications for the Ripple-SEC case. If the judge rules in favor of Coinbase and determines that token sales on exchanges are not subject to securities laws, it could pave the way for a settlement between Ripple and the SEC. However, this would only apply to token sales and not to other activities such as crypto staking.
As the legal battle unfolds, both Ripple and the SEC continue to present their arguments and defend their positions. The crypto community eagerly awaits further developments in this high-profile case, as it could have far-reaching implications for the regulatory landscape surrounding digital assets in the United States.