The US Securities and Exchange Commission,11 months ago, sued Ripple Labs for selling XRP tokens in violation of securities regulations. It also sued Brad Garlinghouse and Chris Larsen, CEO and chairman of the company, for contributing to and benefiting from the violation. This has been a long lawsuit since then, and it seems it won’t end anytime soon.
Fox Business Investigative Report into the Legal Battle Between SEC and Ripple
According to the leading news broadcaster Fox Business on November 25, the media now has an investigative report into the legal battle between the US Securities and Exchange Commission and Ripple Labs, Inc. The case has been delayed since December last year and has attracted widespread public and media attention.
The dispute is that Ripple sold its XRP tokens as unregistered securities. The Fox Business Report assumed the situation when the SEC first took action against the fintech company. They pointed out that the case was raised a few days before the committee’s change of power, which is rare when the outgoing leader usually leaves such an important decision to the new government. What’s even stranger is that Ripple didn’t settle for a settlement with the US Securities and Exchange Commission, but chose to resolve their case in court.
These key decisions by both parties left many unresolved questions that must be determined by the outcome of the case. On the one hand, the US Securities and Exchange Commission is said to have the upper hand, which means that the crypto industry will be subject to strict regulatory scrutiny to the Commodity Futures Trading Commission (CFTC). The industry fears that this will stifle innovation from the US overseas, or make it worse.
The main results of the Fox Business Investigation
The investigation began during the tenure of former SEC chairman Jay Clayton. Clayton has given serious thought to how to regulate cryptocurrencies. To that end, he took enforcement action against several apparent crypto fraud cases. Clayton initiated 87 cryptographic processes during his tenure.
However, according to the report, he still appears to be sceptical of Ripple’s actions. On the other hand, the US Securities and Exchange Commission believes that Ethereum and its Ether token have many similarities to XRP and that Bitcoin is not a security. Ripple has sparked a lot of controversy over Ether’s standpoint.
Fox Business found that Bill Hinman, the former corporate finance director of the US Securities and Exchange Commission, held several meetings in 2017 and 2018 with people involved with Consensys, which is heavily linked to Ethereum. This is before his now-famous speech announcing that Ethereum is not a security. Ripple supporters believe these meetings could influence his decision.
Effects on XRP and its Holders
Since the beginning of the fall, it has been difficult to capture the price of XRP in the market.
Shortly after the lawsuit was filed, XRP fell 70% and has not even hit its all-time high of $3 since then. This has ensured that XRP holders will join the competition and file a lawsuit against the US Securities and Exchange Commission. XRP holders argued that the SEC’s actions were not in their best interests. Under the leadership of John Deaton, XRP holders have been heavily involved in the case from the beginning of the lawsuit until they were granted amicus curiae status.