A potential settlement between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has been a core debatable topic in the cryptocurrency community. While some XRP enthusiasts have portrayed it as a decisive victory, tagging it a “showdown”, legal experts have cautioned against this interpretation.
Settlement Seen as Compromise, Not Victory
Bill Morgan, a lawyer supporting XRP, recently downplayed the likelihood of an imminent settlement. He argued that a settlement would likely involve concessions from both parties, rather than a clear win for either side, in his words “This is unlikely to happen but if it does it is a compromise not a big win. It means both parties give up something.”
A former SEC lawyer, Marc Fagel, also downplayed rumors of a settlement being discussed during a recent closed-door SEC meeting. He explained that such meetings are not typically used to finalize settlements.
The complexities surrounding a potential settlement stem from the SEC’s 2020 lawsuit against Ripple. The SEC alleges that Ripple raised over $1.3 billion through unregistered sales of XRP tokens. The agency classified XRP as a security, but a 2024 court ruling by Judge Analisa Torres provided some nuance. The judge ruled that certain XRP sales did not constitute securities transactions.
Following this ruling, some XRP proponents, such as TheNaturalCube, believe the SEC is unlikely to agree to a settlement without significant concessions. They argue that the SEC should be barred from appealing the court’s decision.
However, legal experts like Morgan point out that settlements typically prevent appeals, furthermore, the lawyer highlighted a potential hurdle Ripple could encounter even after resolving the lawsuit, in his words “The more likely difficulty is other Ripple XRP sales since December 2020 and future Ripple sales of XRP.”
Recent Court Case and Impact on Future Sales
Adding to the uncertainty is the recent court decision in the Aron Govil case. Ripple’s Chief Legal Officer, Stuart Alderoty, believes this case could influence the SEC’s case against Ripple. The Govil decision suggests that the SEC may not be entitled to disgorgement from sellers if buyers suffer no financial losses.
In March 2024, the SEC argued that institutional investors lost $480 million due to Ripple’s alleged discrimination during XRP On-Demand Liquidity (ODL) sales. The SEC claims that Ripple should have disclosed discounts offered to certain investors. If a settlement is reached, the SEC could use this argument to restrict Ripple’s future sales of XRP.
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Regulatory Uncertainty Hinders Ripple’s IPO Plans
Further complicating matters are Ripple’s plans for an initial public offering (IPO) in the United States. The regulatory uncertainty surrounding XRP makes it difficult for Ripple to proceed with an IPO.
The potential settlement between Ripple and the SEC remains shrouded in uncertainty. The complexities of the case, the SEC’s financial demands, and the recent court decision in the Aron Govil case are all factors that could impede a resolution.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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