Today, the “watchdog” of the crypto market is the Securities and Exchange Commission (SEC). The SEC aims to protect investors in the United States. To do this, they impose regulations on the securities market. Yet, back in December 2020, the SEC decided to sue Ripple Labs. Fast forward two years, we provide an update on the long-drawn Ripple lawsuit.
Background
Before that, let’s take a walk down memory lane. How did the Ripple lawsuit arise in the first place?
Well, the SEC alleges Ripple Labs was selling $XRP as an unregistered security in 2013. In other words, the company, Ripple, has violated securities laws.
(5/10)
According to the complaint, Chris Larsen, Ripple Lab's co-founder & former CEO, & Brad Garlinghouse, Ripple's current CEO, impacted personal unregistered XRP transactions totaling about $600M, as well as structuring the XRP sales used to sustain the company's operations.
— White Hat Crypto (@whitehatcrypto) July 14, 2022
But wait! That’s not all! The SEC has also sued:
- Chris Larsen – Co-founder and Chairman of Ripple.
- Brad Garlinghouse – The CEO of Ripple.
Why were they in the SEC’s line of fire? First, they were accused of making unregistered $XRP sales from their personal wallets. Second, they were accused of using the proceeds from $XRP sales for company operations.
In Ripple’s defense, they did not consider $XRP as a security at all. Hence, they did not need to follow the rules set by the SEC for securities.
So, who’s right and who’s wrong? Only Judge Analisa Torres has the answer. For now, what we can do is to update you with the ins and outs of this protracted lawsuit.
Update #1: Jed McCaleb’s Sell-Off
It’s pretty much well known that a large chunk of the $XRP supply lies with the company and its co-founders. Indeed, Jed McCaleb, Ripple’s earliest co-founder, used to own 18.6% of $XRP’s circulating supply. This amounts to over nine billion $XRP, or USD$3.33 billion at today’s prices!
Fortunately, Jed sold off all his $XRP in July last year. Since 2014, he’s no longer with Ripple as he left to set up the Stellar Foundation.
What does this mean for $XRP holders? In general, the community is happy as the selling pressure from Jed is over. But, was it really worth it? Jed’s prolonged sell-off meant that $XRP’s price was kept low. The Ripple lawsuit with SEC also wiped out retail interest in $XRP. With this double whammy, $XRP has yet to reach anywhere near it’s all-time high (ATH) price of $3.40, set in January 2018.
Update #2: Fox Business Cries Wolf
Back in November 2022, Fox Business made a boo-boo online about the Ripple lawsuit. They announced that a settlement was reached between the SEC and Ripple. However, that is not true and a settlement never happened.
I said it on day 1, we will aggressively fight to get clear rules for the entire industry in the U.S.
Congrats to all of Team Ripple for getting us to this point. Ripple stood strong and withstood the SEC’s onslaught. I look forward to being on the right side of justice. https://t.co/oKhKjIdTSW
— Brad Garlinghouse (@bgarlinghouse) December 2, 2022
Indeed, the tussle between the SEC and Ripple wasn’t over just yet. In fact, Brad is persistent and determined to win this case, as you can tell from his tweet above.
Update #3: SEC Wins Its Case Against LBRY
Now of course, Ripple isn’t the only project in the SEC’s crosshairs. Content-sharing crypto project LBRY was brought to court back in March 2021. The reasons for this were similar to that of the Ripple lawsuit. The SEC alleges LBRY of selling unregistered securities in the form of $LBC tokens.
Sadly, the court ruled in favor of the SEC against LBRY. Without a doubt, the SEC will use the LBRY lawsuit as an example to push for their victory against Ripple.
We lost. Sorry everyone.
— LBRY 🚀 (@LBRYcom) November 7, 2022
Update #4: Amicus Briefs
Let’s move on to the Ripple lawsuit itself. In our previous update, we brought up the amicus briefs from said lawsuit. Since then, five more organizations have stood forth to support Ripple. They do so via advising the court against the SEC’s lack of clarity in their regulation.
Today, Ripple has 16 organizations that stand behind it against the SEC. These include industry giants like Coinbase and remittance companies like I-Remit.
Update #5: Motions to Seal
In the Ripple lawsuit, Motions to Seal are currently ongoing. This means that both parties are applying to seal documents. This makes the document confidential. In turn, they would not be released to the public. Let’s look at what both sides are trying to do.
- Ripple. Ripple is trying to seal 11 categories of documents. The total document count adds up to over 900. As of today, the SEC is opposing the sealing of five categories of said documents. Ripple argues that sealing these documents is important as it includes sensitive business information.
- The SEC. The SEC is trying to seal the Hinman speech (made on June 2018). In our previous article, we spoke about the Hinman documents. In September 2022, the court ordered these to be released. In these documents, William Hinman, former SEC Division Director, made remarks that $BTC and $ETH are not securities. With that, Ripple would look to use both the speech and documents to push their case forward.
Conclusion
The Ripple lawsuit involves more than just two parties. In fact, the outcome will likely shape the regulatory landscape for the entire crypto space. Indeed, Ripple’s efforts to push for clarity is commendable.
It looks like the scales of justice are tipping ever so slightly in Ripple’s favor. But, in crypto, nothing is ever certain. Now, we can only await the court’s ruling for the final outcome as the case draws to a close.
⬆️ For more cryptocurrency news, check out the Altcoin Buzz YouTube channel.
⬆️ Our popular Altcoin Buzz Access group generates tons of alpha for our subscribers. And for a limited time, it’s Free. Click the link and join the conversation today.
