The multi-year legal battle led by the Securities and Exchange Commission (SEC) regarding Ripple’s alleged unregistered securities offering could end in summary judgment by April. The defendants are Ripple, Chris Larsen, and Brad Garlinghouse.
Ripple raised $1.3 billion through its XRP token sale. The SEC alleges various illegalities of its offerings in its civil lawsuit. The presiding US District Court Southern District of New York could rule in summary judgment within a few weeks.
For context, the SEC has won every crypto lawsuit it has filed in court, whether by ruling or settlement. Despite this track record, however, Ripple has not settled the SEC’s lawsuit.
Given the 10-figure sum at stake, a settlement might have permanently bankrupted Ripple or its executives, leaving them little choice but to take their chances in court.
The current status of SEC v. Ripple
Plenty of legal drama surrounds the high-profile case. Documents obtained from a Freedom of Information Act request flagged a potential conflict of interest within the SEC. Specifically, former SEC director William Hinman openly gave Ethereum a pass on its securities registration requirements. However, an email exchange between Hinman and the SEC’s ethics office showed that he had a financial stake in a pro-Ethereum law firm when he spoke those words. After leaving the SEC, Hinman returned to a position with that same law firm.
Ripple’s attorneys allege that the SEC failed to provide “fair notice” of potential securities regulation violations, violating Ripple’s due process rights.
Last week, the SEC accused Ripple’s defense team of cherry-picking wording from a recent decision by the US Supreme Court. Specifically, that case involved an allegation that the IRS failed to publish its schedule of fines for failing to report foreign bank accounts. The SEC says that case is irrelevant because it involved “fair notice” of fines not of whether a violation had been committed.
Both SEC and Ripple have asked for summary judgment
The entire crypto industry has been awaiting a judicial ruling on SEC v. Ripple for years. Both parties have already filed requests for summary judgment, which uses evidence already submitted by both parties and doesn’t require a jury trial.
Read more: SEC vs. Ripple Labs: Is XRP a security?
After the September 2022 filing, Twitter’s so-called “XRP Army” expected a swift legal victory. However, the case continued to drag out without a final decision. Others are less optimistic about Ripple’s prospects.
Some case watchers suggested Ripple could appeal the decision all the way to the Supreme Court if it loses this round, maintaining the current status quo of indecision.