Update on Ripple vs SEC Case November 1 2024
The longstanding legal conflict between Ripple Labs and the Securities and Exchange Commission (SEC) seemed to reach a conclusion in August. However, the relentless regulator has reignited the dispute by appealing the final judgment, particularly the findings that determined Ripple’s programmatic sales of XRP do not violate securities laws.
As a result, those observing the case are not expected to witness further developments until early 2025. A filing dated October 31 has revealed that the U.S. Court of Appeals for the Second Circuit has set a deadline of January 15 for the SEC to submit its principal brief.
Interestingly, this deadline falls after the inauguration of the next President of the United States. If Kamala Harris is elected, the SEC’s current strategy may continue unchanged, whereas a Donald Trump administration might look to replace Gary Gensler and consequently shift the regulatory stance on various cryptocurrencies.
Ripple remains steadfast in its assertion that the status of XRP is not under scrutiny. One of the most significant points of contention is the summer ruling, which mandated Ripple to pay $125 million—significantly less than the $2 billion initially sought by the SEC—but also confirmed that XRP does not meet the definition of a security and that certain sales of the token do not violate securities laws.
Moreover, Ripple has challenged the relevance of the Howey Test, a framework established in 1946 to classify assets as securities, especially regarding innovative assets like cryptocurrencies. Proponents of the test argue that its adaptability allows regulators to address emerging issues without waiting for lengthy legislative or judicial processes.
Despite the ongoing debate about the Howey Test, Ripple emphasizes that XRP enjoys a unique legal clarity within the cryptocurrency landscape, shared only with Bitcoin (BTC), and insists it should not be categorized as a security. In a recent post accompanying Ripple’s Form C filing on October 24, Chief Legal Officer Stuart Alderoty accused the SEC of attempting to create confusion in the industry. He stated, “As we navigate this process, keep in mind the SEC’s broader strategy: to generate distraction and confusion for Ripple and the industry. But honestly, it’s just background noise now. The hardest part of the fight is behind us. Ripple’s business continues to grow stronger every day, even as this appeal process unfolds.”
The protracted legal battle has also had notable repercussions for XRP investors. The token’s price has remained unstable and depressed throughout 2024, a rare occurrence for a prominent cryptocurrency amid an overall bullish market. Year-to-date (YTD), XRP’s value has decreased by 15.15%.
XRP YTD stock price. Source: Finbold
On a positive note, the recent filing on October 31, which suggested minimal surprises in the upcoming months and the potential for the SEC to miss its deadline, led to a 2.33% increase in the token’s price over the past 24 hours. However, Ripple’s latest action, which involved the unlocking of 1 billion XRP from its escrow system on November 1, did not significantly impact the cryptocurrency’s market value.
Featured image:
Koshiro K. Ripple logo seen on an iPhone screen on SEC. Digital image. Vancouver, CANADA – Apr 30, 2024. Shutterstock, April 30, 2024. Date retrieved: November 1, 2024.
