The U.S. Securities and Exchange Commission (SEC) has been scaling back its enforcement actions against several major cryptocurrency firms, including Binance, Kraken, and Coinbase. This trend has led to speculation about the future of its ongoing lawsuit against Ripple, which has been contested since December 2020.
During a recent episode of The Wolf of All Streets podcast, former White House Communications Director Anthony Scaramucci added to this speculation by suggesting that the SEC had dropped its case against Ripple.
Has the SEC Dropped the Ripple Lawsuit?
As the conversation turned to the SEC’s recent decisions to dismiss lawsuits against crypto firms, Scott Melker, the podcast’s host, listed several companies that had seen cases against them withdrawn, including ConsenSys, Gemini, Uniswap, and Robinhood.
Scaramucci cut in, stating that Ripple should be included in that list. Surprisingly, Melker agreed, implying that the SEC may have abandoned its pursuit of Ripple.
However, there is no official confirmation from the SEC regarding the status of the lawsuit. The case remains in the appeals process. It’s currently under review by the Court of Appeals for the Second Circuit.
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Reasons for the Delayed Dismissal of the Ripple Lawsuit
Despite the SEC’s recent string of dismissals and terminated investigations, legal experts suggest that the Ripple case seems complicated for the SEC to dismiss.
In July 2023, Judge Analisa Torres ruled that Ripple’s programmatic sales and other distributions of XRP did not constitute securities transactions. However, the court also found that Ripple had violated securities laws through direct sales of XRP to institutional investors.
As a result, Ripple was ordered to pay a $125 million fine. Additionally, the court issued an injunction preventing the company from selling XRP to institutional investors without obtaining approval from the SEC. This injunction remains a key factor in the ongoing litigation.
Legal Expert’s Perspective on the Appeal
Attorney Jeremy Hogan, a prominent lawyer in the crypto space, recently outlined the primary obstacle preventing the SEC from dismissing the case outright. In a thread on X, he explained that the SEC’s appeal largely revolves around the injunction imposed by the court.
He emphasized that overturning this part of the ruling would be difficult, potentially extending the legal battle into mid-2025. Hogan also dismissed the likelihood of Ripple successfully overturning the decision through Rule 60 of the Federal Rules of Civil Procedure.
He argued that the viable path forward for Ripple is for both parties to collaborate on a carefully worded motion. This process would require mutual agreement between the company and the regulator.
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