Court case between SEC and Ripple after a year and a half without resolution
At least the SEC was able to get an extension to hear the evidence
A Ripple victory in court is becoming increasingly likely
Ripple has been under criticism for several months. The US Securities and Exchange Commission (SEC) filed a lawsuit against the leadership of Ripple in December 2020 over an undisclosed sale of Ripple tokens that allegedly occurred in 2014. However, it seems very difficult for the SEC to prove the illegality of this alleged crime, Especially since other cryptocurrencies like bitcoin or ether are not subject to this securities law. At least the SEC can now delay court proceedings in exchange for a disciplinary penalty, and the deadline to end taking evidence has been pushed back.
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Ripple sued the Saudi Electricity Company since 2020
Ripple has been in a legal dispute with the US Securities and Exchange Commission since December 2020. Reason for suit: In 2014, Ripple executives sold $1.3 billion in XRP – according to the Securities and Exchange Commission, this was an illegal sale of securities Finance, which was previously introduced by the SEC due to the large volume that must be approved. On the other hand, Ripple sees XRP, like other cryptocurrencies, as not a security, but a currency-like investment class or a commodity to which the securities laws do not apply. The problem with this argument: XRP is produced directly by Ripple and used to fund its own business. The Securities and Exchange Commission argues that XRP should therefore be equated with a security in this case.
Ripple: between a peer-to-peer payment method and a cryptocurrency provider
The tricky thing about the court hearing: It is highly debatable whether a class of security is suitable for Ripple tokens. Ripple is a company that, on the one hand, wants to offer a global peer-to-peer payment method on the Internet, but on the other hand has built its own cryptocurrency with XRP. Success varies: XRP has been among the top ten cryptocurrencies for several years, while Ripple’s Peer-to-Peer network has made no significant progress since the legal dispute. However, XRP is necessary for internal payment transactions in the Ripple network to avoid spam on the network. In addition, the entire company is funded by increases in the value of Ripple currencies. It is precisely this complex and intertwined business concept that can be considered one of the main reasons for the ambiguity of the alleged facts.
Court ruling of great importance to Ripple — and the crypto world
When the Ripple lawsuit erupted in late 2020, several cryptocurrency exchanges removed XRP from their offerings. Ripple co-founder Chris Larsen, who recently made a name for himself with a massive donation of green bitcoin, has faced heavy criticism. Regardless, 2021 was not a bad year for Ripple, as the on-demand liquidity payments on RippleNet increased. XRP has also managed to recover significantly after a weak 2020, although the increase was less robust than most of the competing cryptocurrencies.
However, the court battle still hung like Damocles’ sword over Ripple’s unknown future. Ripple’s unfavorable decision could set a precedent for the Securities and Exchange Commission to target other suspicious crypto transactions. However, at least from today’s perspective, it can be considered that Ripple is more likely to escape the black eye. The SEC is in dire need of an explanation as to why Ripple was only sued six years after the alleged crime — and why the tokens should actually be securities. In addition, the documents submitted by the SEC will raise more questions than answers, according to a “Bitcoin2Go” report. Ripple’s victory in court could be another step towards cryptocurrency trading. However, a final decision in the case can only be expected in October or November 2022, attorney James Phelan recently tweeted.
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