The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has far-reaching implications for the cryptocurrency. The lawsuit, which began in 2020, hurt XRP’s adoption by major institutions in the U.S. and prevented it from reaching a new all-time high in 2021.
A recent Fortune report highlighted a recent statement by former SEC litigator Ladan Stewart, stating that the Ripple case has the potential to reach the Supreme Court.
Stewart recently participated in a debate with blockchain lawyers at Columbia Business School, highlighting the differing viewpoints. The SEC considers the initial sale and offering of tokens to be securities offerings, but not necessarily the underlying assets themselves.
This distinction is crucial to the Ripple case. The SEC alleges that Ripple sold XRP as an unregistered security, thus violating federal laws. Ripple, on the other hand, maintains that XRP is a utility token used for facilitating cross-border payments and does not meet the criteria of security.
The Court’s Opinion on XRP’s Status
In July 2023. U.S. District Court Judge Analisa Torres ruled that secondary market sales of XRP (non-institutional sales occurring on cryptocurrency exchanges) do not constitute security offerings. Although many see this decision as the final word on XRP’s security status, the SEC is widely expected to appeal the ruling, potentially setting the stage for a Supreme Court battle.
The Ripple case is not the only one with Supreme Court potential. Stewart also identified the ongoing lawsuit between the SEC and Coinbase as another possible candidate. Similar to the Ripple case, the crux of the Coinbase lawsuit hinges on whether certain digital assets offered by the cryptocurrency exchange qualify as securities.
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Stewart’s departure from the SEC in February 2024 to join White & Case, a prominent international law firm, adds another layer to the story. Her involvement in litigations against FTX, Ripple, and Terra positions her with unique insights into the regulatory landscape surrounding cryptocurrencies.
Read Also: Breaking: Ripple Files Opposition to SEC Appeal Request Over XRP Victory
Notably, Stewart left the SEC while the agency was building its case against Coinbase, which U.S. District Court Judge Katherine Polk Failla ultimately allowed to proceed in March 2024.
Ripple has expressed its commitment to defending its position. As CEO Brad Garlinghouse previously stated, the company is prepared to take the case to the Supreme Court.
This resolve stems from the potential impact the case will have on the broader crypto industry. A definitive ruling from the Supreme Court would provide much-needed clarity on how cryptocurrencies are classified under existing securities laws.
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