CRYPTO NEWS AGREGATOR
Wed, Dec 29, 2021 9:43 PM by Anna Key

Ripple Lawsuit Can Bring Change to the Crypto World

Ripple Lawsuit

How It Began

In December 2020 the SEC (U.S. Securities and Exchange Commission) filed an action against Ripple and its executives Christian Larsen and Bradley Garlinghouse accusing them of “raising over $1.3 billion through an unregistered, ongoing digital asset securities offering”. The case has drawn a wide response in the crypto community. 

Based on the SEC investigation, Ripple has been conducting illegal actions since 2013. These involve raising funds through selling digital assets (XRP) in an unregistered securities offering, distributing XRP in exchange for labor and other non-financial services as well as violating federal securities laws. The SEC alleged that Ripple did not provide lawful core protection and security to XRP investors.

According to the SEC official statement, the complaint was filed in federal district court in Manhattan, charging the company and its two executives with violation of the Securities Act of 1933 and seeking “injunctive relief, disgorgement with prejudgment interest, and civil penalties”.

Ripple clapped back by saying the allegations have no grounds and confirmed the team’s strong belief in defending the company’s name in court. Ripple is designed for making cross-border transactions faster and cheaper. The SEC is accusing Ripple of being unregistered security.

According to the SEC, security is a token that can represent an investment of money in an enterprise while it is also expected to make a profit. Ripple argues that XPR cannot be named security and the XRP was never issued in an ICO. Ripple is a digital currency, therefore it does not fall under the jurisdiction of the SEC. However, this is not the only key event that happened this year, regarding the Ripple vs SEC lawsuit.

2021 was indeed a rough year for Ripple. In March, Ripple went as far as accusing the SEC of abuse of authority. The SEC requested access to Ripple executives’ banking info, however, their request was denied and found inappropriate by the court. Ripple also asked the SEC to explain why BTC and ETH are not classified as securities.

Ripple SEC Discussion

In June XRP’s prices started to increase when the news broke out that the SEC was granted a two-month delay in reviewing the case and ordered to disclose their process of cryptocurrency classification and securities approval.

What is Next?

Recently we have seen several SEC officials stepping down. As some experts point out, this means that the SEC has poor leadership and does not know the direction they are heading. The lawsuit is expected to be settled next year, and the XRP’s prices are likely to surge if the outcome is positive. Analysts predict sustainable 10x higher prices.

The popular YouTube channel ''Money Side" believes that the Ripple vs SEC lawsuit is only hurting the XRP investors instead of protecting them, as a regulatory body should do. This only proves the unwillingness of the SEC to disclose their documents which could potentially expose them even more in the future. 

Twitter users agree with the YouTube expert’s opinion.

On top of that, the SEC officials are being investigated for conflict of interest in the Ripple vs SEC lawsuit. The investigation is led by Empower Oversight, a nonprofit nonpartisan educational organization. The Empower Oversight has questioned wrongful activities conducted by some of the former SEC officials.

One of them is William Hinman, the former SEC Director of Corporation Finance. Allegedly, Hinman made $15 million from Simpson Thacher law firm, his former partner, which is also part of the Enterprise Ethereum Alliance. Hinman played a crucial part in the process of clearing ETH of the security status. The ruling resulted in ETH prices going up.

However, right after that, the SEC came after Ripple, an Ethereum competitor. The regulatory body filed an action against Ripple, indicating that XRP was an unregistered security. After the SEC announced that they opened a lawsuit against Ripple, XRP prices decreased by 25%. Notably, Hinman left the SEC in December 2020 and rejoined Simpson Thacher.

Based on the information provided by the Empower Oversight, Hinman was not the only former SEC official who fled to Simpson Thacher after the case against Ripple was opened.

Furthermore, the former SEC Chairman Jay Clayton became a person of interest when he left the SEC for One River Asset Management, a hedge fund focusing on Bitcoin and Ethereum. He also played an important role in the SEC’s approval of Bitcoin not being a security. It is also rather interesting that Clayton’s tenure at the SEC ended hours after the lawsuit was announced, making Ripple vs SEC his last act as the Chairman.

SEC Chairman Jay Clayton: Cryptocurrencies Like Bitcoin Are Not Securities

There is no doubt these investigations will impact the Ripple vs SEC lawsuit. On top of that, the SEC recently got caught trying to delete documents involving Hinman relevant to the lawsuit.

Ripple’s innovative technology is used for fast and cheap cross-border transactions. Back then Ripple was the main competitor to Ethereum and Bitcoin and was fighting for its dominance on the market. Experts indicate that the XRP sale was even less than security compared to Ethereum’s Ether digital coin that was used in 2014 to finance the project through an ICO. 

The general public is not satisfied with how long it is taking to resolve the case.

One user wrote on Twitter:

Many believe that the SEC case is only stopping crypto from evolving. If certain regulations are implemented, it will be much harder for crypto to survive on the market. 

Crypto holders are worried about the future of cryptocurrency.

Future of cryptocurrency

Conclusion

If Ripple wins, the crypto community will benefit drastically from this case. The outcome will set a positive precedent for the entire crypto world and therefore some important regulations regarding cryptocurrency, in general, will be clarified. We will get clear, black-and-white regulations.

The lawsuit is likely to settle in 2022, and the next few months will be crucial for Ripple. Winning this case will make Ripple one of the most secure cryptocurrencies at the moment. Ripple could expect a flow of new investors and big partnerships. 

At the time of writing this article, Ripple has announced that the case will not be settled unless the SEC gives full approval to XRP in the same manner it did for Ether.

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