In a significant development for the cryptocurrency industry, Ripple has strengthened its legal defense against the U.S. Securities and Exchange Commission (SEC) through strategic personnel changes and new legal filings.
Recent court documents reveal substantial changes in Ripple’s legal representation strategy. The company’s Executive Chairman Chris Larsen has transitioned to new counsel following the departure of Paul, Weiss, Rifkind, Wharton & Garrison.
This adjustment came after the appeal court notified Larsen of a missing appearance notice. In response, Larsen has secured representation from the same legal team that previously achieved success in dismissing charges against himself and Ripple CEO Brad Garlinghouse.
The enhanced legal team now includes Cleary Gottlieb partner Matthew Solomon and cryptocurrency prominent attorney John Deaton who is currently running against Sen. Elizabeth Warren for a seat in the U.S. Senate. Both attorneys have joined as non-admitted counsel, suggesting a focused and strategic role in the proceedings.
Appeal Process And Ripple’s Arguments
The SEC has filed to appeal parts of Judge Torres’ rulings and has reintroduced its charges against Garlinghouse and Larsen which it previously dropped.
Ripple’s cross-appeal introduced several critical questions regarding cryptocurrency regulation. The company challenges fundamental aspects of securities classification, including whether an “investment contract” requires formal documentation and the relationship between profit generation and seller activities.
Additionally, Ripple has reintroduced its “fair notice” defense, contending that the SEC failed to warn about XRP’s potential classification as a security.
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Timeline Extensions and Regulatory Implications
The legal proceedings have entered an extended phase, with the SEC requesting a January 15, 2025 deadline for its principal appeal brief. Former SEC attorney Marc Fagel has provided context, noting that while certain aiding and abetting charges related to institutional sales have been dismissed, other allegations against Ripple executives remain active.
Jeremy Hogan, another well-respected attorney in the crypto world, called the SEC’s revival of charges against Larsen and Garlinghouse a chicken move, mirroring the sentiment of many members of the community, who believed the executives were free after the SEC initially dropped those charges in 2023.
The legal battle has intensified, and getting the SEC to drop the charges against Ripple’s executives again would be a significant victory. However, the outcome of this lawsuit and crypto regulation in the U.S. now lies in the hands of the appeals court.
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