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Ripple attorney John Deaton, representing numerous XRP token holders amidst speculation about a potential solution between Ripple and the U.S. Securities and Exchange Commission (SEC), summarized the possible steps the two parties could take if they prefer an agreement.
Settlement Makes Sense for SEC
Deaton emphasized the significance of the ongoing Coinbase and SEC case. He stated that if the judge in the Coinbase case accepts the exchange’s request for dismissal, it would demonstrate that token sales on the exchange are not subject to U.S. securities laws. However, this would not apply to crypto asset stake transactions. Deaton continued his statements:
“The only way for Ripple and the SEC to reach an agreement before the end of the year is if Judge Failla accepts Coinbase’s request for dismissal, either fully or partially, which means determining that token sales in an offer or sale transaction on an exchange are not covered by U.S. securities laws.”
If the request for dismissal is accepted, the SEC’s ability to appeal will be significantly limited, and settlement will become a logical option. Deaton also stated that even if an appeal is possible in such a case, the authority of the institution will diminish.
What Has Happened in the Ripple Case?
Ripple stated in a filing on September 1 that the summary judgment did not address the legal basis for the appeal. Ripple’s objection was based on the argument that the SEC deviated from the established legal perspective regarding the application of the Howey test to XRP token sales.
In December 2020, the SEC filed a lawsuit against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, causing several exchanges to delist XRP to avoid potential legal complications. However, after a favorable ruling by Judge Analisa Torres in July, many exchanges decided to relist the token.
The SEC has pursued various cryptocurrency firms, including Binance and Coinbase, for securities violations in 2023. On August 29, asset manager Grayscale achieved a legal victory against the SEC through an appeal that made the review of its application for a spot Bitcoin exchange-traded fund mandatory.
