Legal case between the SEC and Ripple after a year and a half still without a decision
At least the SEC was able to get an extension of the evidence hearing
A Ripple victory in court is becoming more and more likely
Ripple has been under criticism for several months. The United States Securities and Exchange Commission (SEC) sued Ripple’s management in December 2020 for a surprise sale of Ripple tokens that allegedly took place in 2014. However, it seems extremely difficult for the SEC to prove the illegality of this alleged violation, especially since other cryptocurrencies such as Bitcoin or Ether do not fall under this securities law. At least the SEC can now further delay the legal process in exchange for disciplinary action, and the deadline for the end of the taking of evidence has been pushed back.
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Ripple litigation with the SEC since 2020
Ripple has been in litigation with the United States Securities and Exchange Commission since December 2020. The reason for the lawsuit: In 2014, Ripple executives sold $1.3 billion worth of Ripple (XRP) tokens – according to the SEC, however, this was an illegal sale of securities, which the SEC had previously given away due to high volume. approved. Ripple, on the other hand, is of the view that XRP, like other cryptocurrencies, is not a security, but a commodity or currency-like investment category for which securities laws do not apply. do not apply. The catch with this argument: XRP is produced directly by Ripple and used to fund its own business. The SEC argues that XRP should therefore be considered a security in this case.
Ripple: between the peer-to-peer payment method and the cryptocurrency provider
The tricky thing about the court hearing: it is extremely controversial whether the security category is appropriate for Ripple tokens. Ripple is a company that on the one hand wants to offer a global peer-to-peer payment method on the Internet, but on the other hand has designed its own cryptocurrency with XRP. Success varies: XRP has been among the top ten cryptocurrencies for several years, while Ripple’s peer-to-peer network has not made significant progress since the legal dispute. However, XRP is essential for internal payment transactions in the Ripple network to prevent network spam. Moreover, the whole company is funded by the increases in value of Ripple coins. It is precisely this complex and intertwined business concept that can be considered one of the most important reasons for the opacity of the alleged facts.
Court ruling of great significance for Ripple – and the crypto world
When the Ripple lawsuit broke in late 2020, several crypto exchanges removed XRP from their offerings. Ripple co-founder Chris Larsen in particular, who recently made a name for himself with a large green Bitcoin donation, has faced severe criticism. Anyway, 2021 has not been a bad year for Ripple, on-demand liquidity payments on RippleNet have increased. XRP was also able to recover significantly after a weak 2020, although the increase was less than most competing cryptocurrencies.
However, the legal battle continues to hang like the sword of Damocles over Ripple’s uncertain future. A move against Ripple could set a precedent for the SEC to target other dodgy crypto transactions. However, at least from today’s perspective, it can be considered that Ripple is more likely to get away with a black eye. The SEC urgently needs an explanation as to why it only filed a lawsuit against Ripple six years after the alleged crime – and why the tokens should in fact be securities. Moreover, the documents filed by the SEC would raise more questions than answers, reports “Bitcoin2Go”. A Ripple victory in court could be another step towards mainstream cryptocurrencies. However, a final decision in the court case cannot be expected until October or November 2022, as observant lawyer James Filan recently tweeted.
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