Home Cryptocurrency News Everything About the XRP Lawsuit – Part 1

Everything About the XRP Lawsuit – Part 1

The SEC believes XRP is a security.

the xrp lawsuit review

The Securities and Exchange Commisson’s (SEC) lawsuit against US blockchain company Ripple has dragged on for the longest time. Ripple leverages blockchain to process payments and is also the issuer of the XRP cryptocurrency.

Legal experts and observers have given their opinion about the xrp lawsuit with the SEC. The results from this case will be significant for the industry. The SEC has heavily pushed for the regulation of the crypto industry. While the US is yet to approve a nationwide policy on cryptocurrencies, the SEC has busied itself with keeping crypto service providers in check.

However, many critics believe the agency might have taken things too far in its case against the XRP. Now, let’s look at some key details of this lawsuit.

When Did the XRP Lawsuit Start?

The SEC filed a lawsuit against Ripple Labs, the firm behind the XRP cryptocurrency, in 2020. The agency accused Ripple’s founder and executive chairman, Chris Larsen, and CEO, Brad Garlinghouse, of raising $1.3 billion in unregistered securities offerings by selling XRP.

The SEC argued that XRP, which the founders created in 2012, is not a cryptocurrency but a security, bringing it within the SEC’s jurisdiction and subject to securities laws. The lawsuit was one historic moment in the crypto industry, sending the market into chaos. It was one of the first times the SEC clawed its fingers into a well-established platform like Ripple. The lawsuit did more than damage Ripple’s reputation. It also sent the XRP price crashing. Coinbase suspended XRP trading.

Stephanie Avakian, then director of the SEC’s enforcement division, declared in a statement that Ripple” failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”

So, Ripple has managed to put up a strong argument in its defense. The company argued that Ethereum is no different from XRP if classified as securities. Ripple also argued that the SEC has no jurisdiction over the XRP tokens since foreign exchanges have traded them.

How Long Will XRP Lawsuit Last?

The dispute between Ripple and the SEC has lasted two years, but recent comment shows that the case could extend to 2023. Both Ripple Labs and the SEC have filed summary judgment motions, showing that the case is gradually winding down.

Ripple’s CEO, Brad Garlinghouse, recently stated that the case could go on for another 3-4 months and might end in the first half of 2023. Brad also noted that Ripple would go for a settlement if the SEC agrees that XRP is not a security.

Several companies have submitted amicus curiae briefs to the court to support Ripple. The SEC, however, said it would demand more time if more amicus briefs were granted. In response to the SEC’s comments, Ripple’s representatives said, ” This is yet another transparent attempt to further delay the resolution of this case and the court should reject it.”

XRP Lawsuit in a Nutshell

It’s been two years of slow progress and finger-pointing between the SEC and Ripple Labs. However, Ripple recently scored a huge win after the court ordered the SEC to hand over the “Hinman documents,” which the agency has fought hard to keep away from the spotlight. The document contained a speech made by former SEC Division Director William Hinman, who remarked that Bitcoin and Ether are not securities.

Ripple considers the speech a piece of evidence against the SEC. However, it’s too soon to know if the language used in the speech will have the same impact as the firm claims.

The lawsuit’s outcome will significantly impact the whole cryptocurrency industry since it will set the tone for all upcoming regulations in the United States and the rest of the world. These rules will determine whether a cryptocurrency is a security and whether the SEC or another agency regulates it.

Prominent members of the industry have also stood by Ripple. The founder of the Cardano blockchain and cryptocurrency, Charles Hoskinson, expressed his opinions about the Ripple situation on Twitter.

Charles claimed that XRP is not a security since it fails the Howey test, like most layer-1 protocols. According to the developer, imposing securities restrictions on assets with millions of independent global users and investors is illogical.

Charles, however, objected to Ripple’s strategy for handling the dispute. He criticized the company for its personal attacks on some SEC workers.

That’s it for now. We have an article with more details about the dispute. You can find the link here. What’s your take on the lawsuit? tell us in the comment section.

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