By January 15th, the U.S. Securities and Exchange Commission (SEC) plans to submit its opening arguments for appeals in the Ripple lawsuit. Unlike the classification of XRP as a security made by Judge Analisa Torres, the SEC did not dispute this point; instead, it chose to appeal most of the decisions where it lost, such as Ripple’s sales of XRP on cryptocurrency exchanges and individual sales made by its executives Brad Garlinghouse and Chris Larsen.
US SEC Under Gary Gensler to File Principal Brief on Jan 15
Some XRP holders are questioning if the SEC will submit their main argument in the Ripple case, as Chair Gary Gensler is set to step down on January 20 and legal experts predict a potential settlement.
Experts monitoring the legal case between the SEC and Ripple Labs, attorneys Jeremy Hogan and Marc Fagel both stated that the Securities and Exchange Commission (SEC) intends to abide by the court’s ruling.
As a researcher, I’m sharing insights on the ongoing XRP lawsuit. It’s been suggested that the Trump administration and incoming SEC Chair Paul Atkins might choose not to escalate the case further. Previously, Hogan, the lawyer for Ripple, had anticipated a last-minute filing and potential settlement where Ripple would pay $125 million in civil penalties as per Judge Torres’ earlier order. He predicts that this lawsuit could reach its conclusion in April or May.
Challenge to XRP Programmatic Sales Ruling in Ripple Lawsuit
The Securities and Exchange Commission (SEC) intends to challenge the July 13 decision on XRP programmatic sales, as stated in their Pre-Argument Statement Form C. Essentially, they plan to reiterate that these sales constitute unregistered securities transactions under the Securities Act of 1933.
On January 8th, a post on X featured remarks by ex-SEC lawyer Marc Fagel, stating “The court concurred with the SEC’s view that Ripple had breached the law, conducting an unregistered securities offering worth more than $700m.” However, he speculates that the ongoing Ripple lawsuit may not advance under the crypto-friendly administration of President Trump.
XRP Secondary Sales by Ripple, Executives and Employees
In light of Judge Analisa Torres’ decision in the Ripple vs SEC case, which did not definitively categorize XRP as either a security or a commodity, Gensler’s Securities and Exchange Commission will present its views on secondary sales. This ambiguity has significant ramifications for both Ripple and the broader cryptocurrency sector.
As a crypto investor, I should mention that back then, XRP was labeled as a “currency” by both the U.S. Department of Justice and the Financial Crimes Enforcement Network (FinCEN) within the U.S. Treasury Department. This classification could potentially have implications for regulatory compliance and legal considerations in the future.
The main focus of the Securities and Exchange Commission’s appeal pertains to transactions involving secondary sales, such as Ripple’s XRP sales on digital exchanges, dispersal of XRP to company employees and others, and personal XRP sales made by CEO Brad Garlinghouse and co-founder Chris Larsen.
Higher Penalty Than $125 Million and Disgorgement
The Securities and Exchange Commission (SEC) plans to push for a more substantial fine than the current $125 million and will reconsider the issue of disgorgement. In line with their past arguments, they believe that the proposed penalty is insufficient to act as an effective deterrent, so they aim to reiterate these points.
Nevertheless, Stuart Alderoty of Ripple’s legal team voiced disapproval towards the SEC, stating their arguments were unsuccessful and an unnecessary drain on taxpayer funds. The SEC under Gensler’s leadership has been criticized for failing to offer clarity regarding which digital assets qualify as securities and which do not. It is worth noting that Ripple had previously adjusted its XRP On-Demand Liquidity (ODL) transactions in accordance with a previous ruling by Judge Torres.
Former SEC lawyer James Farrell even said,
In simpler terms, the legal case involving Ripple was interesting because Judge Rakoff, who is highly respected in securities law and not a supporter of the SEC, was on one side, while Judge Torres was on the other. As a result, Judge Failla leaned more towards Ripple, following Rakoff’s perspective.
What’s Next After Opening Brief Related to Appeals?
The sit-down between Ripple’s top brass and President-elect Donald Trump has ignited optimism for positive developments for the company and its expansion within the U.S. In fact, Ripple CEO Brad Garlinghouse recently highlighted that a significant 75% of their job vacancies are now based in the United States, and over the past six weeks, they’ve secured more deals in this region.
Great dinner last night with @realDonaldTrump & @s_alderoty.
Strong start to 2025!
— Brad Garlinghouse (@bgarlinghouse) January 8, 2025
Although the court’s decision in favor of Ripple might establish a significant legal precedent for future cryptocurrency-related lawsuits, it’s possible that the involved parties could opt for a resolution through settlement or dismissal as the new chair of the Securities and Exchange Commission (SEC), Paul Atkins, takes office.
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2025-01-09 14:06