In recent months, the legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has garnered significant attention in cryptocurrency. The SEC alleges that the company distributed 14.6 billion units of XRP without registering it as a security and has sued the company and its executives for this alleged violation.
However, the case is far from straightforward. Many legal arguments are being made on both sides, and it is difficult to determine who will come out on top. Pro-XRP lawyer John Deaton has pointed out that the parties have not yet filed their 56.1 statements and counter statements, which will contain indisputable facts and evidence supporting their positions for summary judgment. This means that making any definitive conclusions about the case is premature.
Ripple Defense Could Secure Total Victory In Court
According to Deaton, One of the key arguments being made by Ripple is that XRP is not a security because there is no underlying contract between Ripple and XRP holders. However, Ripple has admitted in its summary judgment brief that there were XRP sales made by Ripple that did have a written contract as part of the sale.
Remember, we haven’t seen the the 56.1 statements and counter statements filed by the parties. The 56.1 statements and counter statements is where each party cites indisputable facts and evidence supporting their position for summary judgement. https://t.co/KCje445PHA
— John E Deaton (@JohnEDeaton1) May 18, 2023
Ripple argues that these contracts cannot be deemed investment contracts because they did not obligate the company to take post-sale actions for the benefit of XRP holders and did not allow XRP holders to demand anything from Ripple, share in Ripple profits, or grant any equity of any kind.
Furthermore, Deaton stated that while Ripple’s argument may be persuasive, it is uncertain whether the judge will agree with it. If the judge finds that these specific sales constituted investment contracts and that Ripple violated Section 5 by not registering them as securities, Ripple’s fair notice defense may come into play.
This defense argues that the firm lacked fair notice that XRP sales were effectively illegal (unregistered), and that the jury should decide whether those early sales should be excused.
This case has many different possible outcomes, but if the judge agrees with the blockchain company’s arguments and the jury ultimately decides that the early sales should be excused, it would be a total victory for Ripple, according to the Pro-XRP Lawyer. However, it is important to remember that this is just one possible scenario, and many other factors are at play in this case.
However, Deaton believes that the legal battle between the company and the SEC has far-reaching implications for the cryptocurrency industry as a whole. If XRP is deemed a security, it could have significant consequences for other cryptocurrencies, particularly those distributed through initial coin offerings (ICOs). The outcome of this case could set a precedent for how cryptocurrencies are regulated in the United States and worldwide.
As of this writing, XRP is currently experiencing a significant uptrend in its price action for the last couple of days. Currently, the token is trading at $0.4688, up by 1.1% in the last 24 hours and posting a considerable growth of 10% in the seven-day time frame.
Featured image from Unsplash, chart from TradingView.com