Over time, the crypto sphere has been greeted with various legal tussles. One of such is the lingering xrp lawsuit, which undoubtedly began two years ago. Indeed, the legal battle between XRP team and the US regulator (SEC) has, since two years ago, continued to take numerous dimensions, thereby creating suspense amidst all concerned actors within the crypto space. Despite the fact that the XRP SEC legal tussle is two-years old, it is yet to attain any major headway. This development thus suggest that the xrp lawsuit might still linger for a while. While it continues to linger, this article will carefully relay the XRP lawsuit update, its background, current status, and the likely future of the case.
Background to the lawsuit
Notably, the XRP lawsuit began after SEC instituted a case accusing Ripple Labs Inc of amassing over $1.3 billion via illegal avenues. SEC claimed the crypto firm and its executives indulged in the sale of unlicensed security to investors. According to the filing, the SEC accused the co-founder of Ripple, Christian Larsen, and the serving CEO of the organization, Bradley Garlinghouse, of bagging a substantial profit from the dealings.
Additionally, the U.S regulator alleged that the two Ripple Inc shareholders marketed the products of the organization to investors without permit. Also, the agency illustrated that the crypto firm engaged in such “illegality” within 2013-2020. According to the filing, Larson and Garlinghouse carried out unrecorded sales of XRP worth $600 million. Lastly, the Commission points strongly to the failure of the firm to fulfill the registration stipulations of federal securities regulation. This, as revealed, birthed the XRP SEC lawsuit.
As expected, the crypto protocol responded by challenging the powers of the regulator to monitor its operations. Ripple, in a 93-page legal document, argued that XRP is never security and the operations of SEC on the protocol stand unlawful. Additionally, the firm insisted that SEC lacks jurisdictional power to query their operations.
Also, Ripple Inc downplayed the argument by SEC, stressing that it appears out of context. Similarly, Garlinghouse averred that the SEC vs XRP lawsuit is not Ripple’s war but a war against the entire crypto industry. According to him, Ripple says SEC is only trying to legally bully firms within the industry.
XRP lawsuit update
As of today, the only major XRP lawsuit update manifested a few weeks ago. The U.S Magistrate Judge, Sarah Netburn refused SEC’s submission of an attorney-client request for an internal document relating to “Hinman Speech”. Reportedly, the judge slammed the SEC for contending that Hinman’s speech is a personal opinion of the ex Official.
As per emerging reports, SEC sees the speech document as one that could threaten its chances in the legal tussle. The regulator then decided to conceal the speech. The court, however, ordered the release of the speech to serve as a point of reference and evidence in the tussle.
XRP SEC lawsuit likely to linger for long
As predicted, the XRP SEC lawsuit will likely drag on for a while, though Ripple, an organization, has complained about how the longevity of the lawsuit is affecting it. For SEC, the length of the case is more or less a saving grace. The Hinman speech has further strengthened the position of Ripple to challenge the legitimacy of the SEC to oversee its activities. The speech is a substantial evidence that will go a long way in deciding the fate of the case. Notably, the high profile of the case reflects that its verdict will shape the fate of cryptocurrency in the United States.
For a long time, there has been a strong argument over who’s in the worthy position to watch over cryptocurrency organizations in the U.S. Before now, the Security Exchange Commission has been more vocal than any other regulatory body in the country. Yet, many believe the Commodity Future Trading Commission holds the divine right to regulate the industry. This argument emanated from the confusion of whether the CTFC or SEC is in the right position to regulate cryptocurrency.
How a cryptocurrency regulation bill could have averted the XRP SEC lawsuit
To be fair, the XRP and SEC lawsuit won’t exist today if there has been a stipulation that directly defines the relationship of the CTFC and SEC towards the cryptocurrency sector. Though, Senator Lummis is working to correct that deficiency with her proposed cryptocurrency bill. However, the bill is far from adoption as it’s still under deliberation by numerous in-house committees.
With the bill, the CFTC will gain more strength to oversee tokens billed as commodities. This implies that the body will monitor the activities of tokens like Bitcoin and Ethereum. While the SEC will be limited to monitoring tokens that are used to raise money from the public. This activity is quite similar to a stock offering. The bill will likely attain a voting session before the end of the month.
If the Senator Lummis bill had been in place before now, SEC would have been in a leading position in the lawsuit. Before the emergence of the Hinman speech, the SEC has been in a commanding position. Its emergence has birthed more controversial nature to the lawsuit.
Aside from lacking the jurisdiction to sanction Ripple, the SEC is faulting the organization and its executives. The SEC is emphasizing on the need of why the Ripple executives failed to register duly before selling the tokens to raise funds. In all fairness, an authority or regulator reserves the right to raise such question irrespective of its worthiness or not. Nonetheless, the SEC has been more hypocritical with its attempt to rule out Hinman’s speech as irrelevant to the case.
XRP lawsuit: Who is to be blamed?
Both parties need to have shared their equal share of the blame. Ripple should have registered with appropriate authorities before commencing operation. The organization and its executives are debunking the worthiness of the SEC in sanctioning it. Then, Ripple could have avoided the whole fracas by doing the needful. However, the Lummis bill might be irrelevant to the XRP SEC lawsuit. Yet, there are notable points one can pick and meditate on before picking sides.
Firstly, the bill tends to offer the SEC the jurisdiction of monitoring tokens that are used to raise money from the public. This is exactly what Ripple and its executives did before incurring sanctions from the SEC. Accordingly, if lawmakers are recognizing the SEC as a rightful watchdog for coin offerings, then Ripple ought to have done the same.
Currently, the two parties in the XRP SEC lawsuits are playing to their advantage because the law had no directive in that regard. If Ripple is questioning SEC’s authority over the issue, it has every right. Also, if the SEC is faulting the organization for not registering with it, then it has the right to do that.
How XRP SEC Lawsuit is emphasizing on collaboration between cryptocurrency firms and regulators
One theme has dominated all of the XRP lawsuit update, this theme has overtly reflected in the argument of both parties. Gradually, cryptocurrency enthusiasts are embracing the reality that firms and regulators must work together for the industry’s good. This reality has heavily dominated every update regarding the XRP SEC lawsuit. In every development surrounding the case, there is a noticeable difference in terms of the agreement between the two parties. Despite being two significant actors in the industry, there is an evident gap between the two.
Aside the absence of a regulatory framework, Ripple could have averted the whole crisis if the firm had a good relationship with the SEC. With a good relationship, the organization could have commenced operation under the full guidance of the SEC. Overtly, the CEO of Binance, Changpeng Zhao, has stressed the need why regulators and cryptocurrency firms must work together. This approach has birthed positive results for his firm, Binance, and the cryptocurrency industry at large. With that, Binance has bagged numerous operational licenses across different countries and regions. This development has enhanced the expansion of the cryptocurrency industry and helped Binance cement its place as a force to reckon with.
Henceforth, cryptocurrency firms and enthusiasts must come to realize that the industry cannot prosper in confinement. Failure to build a prosperous relationship with regulators will birth an aggressive approach from regulators. Exactly like how the SEC has been antagonistic toward Ripple in this lawsuit.
Likewise, the mindset of seeing regulators as opposition to the progress of cryptocurrency must end. We’ve seen fraudulent projects rob investors of their investment with stern opposition from anyone. However, we’ve seen how regulators have helped nailing down dishonest developers and their projects for the interest of investors.
Remarkably, the final verdict of the lawsuit will go a long way in shaping the future of cryptocurrency. Even before the final proceedings, the XRP SEC lawsuit has influenced numerous changes across the sector. Firstly, it’s one of the major factors that inspired the proposed cryptocurrency bill by Senator Lummis. Aside from that, the SEC admitted to be working on a unified regulatory framework alongside the CFTC. With that, the SEC is aiming to work alongside the CFTC to regulate the sector properly. This implies that either sooner or later, there won’t be arguments about which body has the legitimacy to regulate the industry.
Furthermore, if it ends positively for Ripple, then the SEC’s influence in the market will reduce bringing the CFTC into the limelight.