The crypto world is preparing for the second phase of the legal battle between the United States Securities and Exchange Commission (SEC) and blockchain firm Ripple. Last week, after Ripple’s opposition to the SEC’s intention to appeal the decision, the stage was set for the second battle. As announced in a post published on X (formerly known as Twitter) on September 1 by defense attorney James Filan, the blockchain firm believes that the SEC did not fulfill all the requirements to file an appeal.
Ripple made the following statement:
Even after the Individual Defendants identified this deficiency in their pre-motion letters, the SEC did not attempt to meet the standard for a stay.
Ripple pointed out that the summary judgment did not address the legal reasons for temporary appeal. Their objections were based on the claim that the SEC deviated from the established legal perspective regarding the application of the Howey test to XRP token sales. In August, the SEC claimed that there were significant differences of opinion on existing laws and provided significant reasons for their objections.
Will Ripple and SEC Reach a Settlement?
Amid speculation surrounding a possible resolution in the case, John Deaton, an XRP-friendly attorney representing numerous XRP token holders, outlined potential courses of action the two parties could take if they choose to reach an agreement in a post on September 2.
Deaton also highlighted the significance of the ongoing legal battle between Coinbase and the SEC. He explained that if the judge presiding over the Coinbase case accepts the exchange’s request to dismiss the lawsuit, it would mean that token sales on the platform are not subject to US securities laws. However, he clarified that this decision would not cover cryptocurrency staking activities.
The only way Ripple and the SEC can reach an agreement before the end of the year is if Judge Failla accepts Coinbase’s request to dismiss the lawsuit, in whole or in part. This would determine that token sales made through a blind bid/sale transaction on an exchange are not within the scope of US securities laws.
If the request for dismissal of the case is granted, the SEC’s capacity to initiate an appeal will be significantly limited, making a settlement a reasonable course of action. Especially since the SEC had informed the court that it was ready for a trial in the second quarter of 2024. Deaton also stated that even if an appeal were possible under these circumstances, the agency’s jurisdiction and influence would be significantly constrained.
SEC and Court Performance
It should be noted that the SEC’s performance in other crypto cases is being examined as a possible projection of the outcome of the agency’s case against Ripple. As previously reported, Stuart Alderoty, Ripple’s Chief Legal Officer, pointed out that the SEC was battered in court and that this could serve as a precedent for other crypto cases involving the regulator.
Meanwhile, Ripple CEO Brad Garlinghouse described the SEC as “out of control” based on the agency’s performance. In the meantime, XRP regained the $0.50 level, recording minor gains of less than 0.1% in the past 24 hours.