In a recent turn of events, Ripple CEO Brad Garlinghouse announced his resolve to fight the legal case between Ripple and the US Securities and Exchange Commission (SEC) regarding Ripple’s status as a non-security.
The SEC has decided to file an appeal against this judgment. Ripple CEO Brad Garlinghouse has also announced his resolve to continue the legal battle against this appeal.
In a recent post on his X handle, Brad Garlinghouse accused the SEC and its chair Gary Gensler of being irrational in taking this lawsuit forward. He has posted that the case has not benefitted any investors; it has only tarnished the reputation of the SEC among investors.
Garlinghouse accuses the SEC of not understanding the court’s interest despite its defeat on every matter. The interests of Ripple, the larger crypto industry, and the rule of law have already prevailed, and the SEC, through this appeal, is challenging the established interests.
Garlinhouse has also made it clear that despite this misguided appeal, XRP’s status as a non-security has become the rule of the land and it will prevail. Ripple’s chief legal officer, Stuart Alderoty, has also opined that the appeal is irrational and misguided and Ripple will file a cross-appeal to clarify its part.
Drop in XRP’s Value
After the news about the SEC’s decision to file an appeal against the pronounced verdict in the Securities and Exchange Commission (SEC) Vs Ripple case came out, XRP’s price dropped by 10%. Currently, XRP is trading at $0.5385.
The price drop started after the final ruling on August 7 that imposed a $125 million penalty on Ripple, which was far less than the SEC’s initial $2 billion demand.
The penalty was imposed after the court found out that Ripple’s XRP sales to institutional investors fell under the category of securities transactions.
However, the court has clarified that even though some of the transactions conducted by Ripple belong to the category of securities, the entity as a whole should still be considered a non-security.
Ripple’s Future Endeavors
Despite the legal battle, Ripple is planning to move ahead with its development activities. The Swell Conference that Ripple is organizing on October 14 and 15 is expected to put forth major announcements about the platform’s development including the potential launch of Ripple’s stablecoin, RLUSD, and the possibilities of an XRP-focused ETF being materialized.
The conference will also talk about Ripple’s future tokenization projects, with experts predicting that XRP Ledger will grow up to a capacity of $50 trillion in assets that could be tokenized.
More Details about the SEC Vs Ripple Lawsuit
The lawsuit between SEC and Ripple was filed in the United States Southern District Court of New York. The SEC accused Ripple of collecting more than $1.3 billion in 2013 by selling XRP as non-security to investors.
The SEC accused Ripple of not having filed any registration documents required for raising capital through initial coin offerings. SEC accused Ripple of having created an information vacuum by disbursing selective details.
This lawsuit is important because its judgment was thought to have greater repercussions on the whole cryptocurrency industry that was trading outside the scanner of regulatory organizations such as the SEC.
The court ruled that Ripple cannot be considered a security when it is sold on public exchanges, but its trade to institutional investors falls under the ambit of securities trade.
In May 2024, the SEC filed a submission that Ripple should pay $2 billion as a fine for alleged trade to institutional investors as a non-security. However, the final court ruling that came out in August 2024 reduced the fine to $125 million.
With the SEC filing the appeal, XRP plans to launch an ETF. The Bitwise Asset Management Company applied to the first-ever XRP spot ETF on September 30, 2024.
The final verdict on the appeal is expected to take over a year, which will affect the ETF plans as the XRP’s regulatory status is still under review.
The Bottom Line
The outcomes of the SEC Vs Ripple lawsuit were a matter of high concern for all cryptocurrency platforms.
The verdict on August 2024 was a partial victory for XRP, but with the appeal filed by SEC, the general concern has once again loomed over the lawsuit.
Nevertheless, the SEC Vs Ripple lawsuit’s outcome will determine the future of the decentralized nature of the cryptocurrency market.
