Crypto lawyers predict the Ripple vs. SEC legal fight will escalate, not end, per analysis. Lawyer Bill Morgan, known for his insightful perspective on the case, took to Twitter to review the remedies phase roadmap outlined in recent court filings. His analysis foresees a fierce battle looming ahead between the involved parties.
It will heat up not settle. The remedies phase in the #SEC v Ripple matter will be full on. I was refreshing my memory from the letters the parties sent to the court about the SEC’s intention to pursue the ultimately doomed motion for permission to file an interlocutory appeal./1
— bill morgan (@Belisarius2020) October 25, 2023
How can one possibly achieve a settlement in such a complex scenario? Morgan expressed doubts.
Initially seeking over $1 billion in penalties from Ripple, the SEC later revised it to $770 million. Ripple, on its part, aims to significantly reduce this amount by excluding specific XRP sales intended for commercial customers.”
In its court letter, Ripple reveals insights into the specific points of disagreement that will shape the ongoing proceedings. According to Morgan, one pivotal matter revolves around distinguishing sales made by institutions versus non-institutional ones.
This matter sparks contentious debates due to the substantial sums at stake, particularly concerning sales made to On-Demand Liquidity (ODL) customers for cross-border payments after a complaint has been filed. Morgan highlighted that these sales do not align with the definition of investment contracts, as ODL customers are not investing in XRP for financial gain.
Moreover, the jurisdiction of the SEC in institutional sales transactions raises unresolved questions. Many of these transactions lack any connection to the United States, as noted by Morgan.
Ripple’s Legal Battle & Lawyer’s Insights
Lawyer John Deaton, who closely followed the case, concurred with Morgan’s evaluation. In a response tweet, Deaton expressed his skepticism about the occurrence of any substantial settlement discussions.
As I said on @CryptoLawUS TV yesterday with @attorneyjeremy1 and Thien-Vu, I do not believe there has been a single serious conversation regarding settlement between @Ripple @bgarlinghouse @chrislarsensf and the @SECGov.
The SEC is pissed and embarrassed and wants $770M worth… https://t.co/kcXvsrPgaa
— John E Deaton (@JohnEDeaton1) October 25, 2023
He emphasized Ripple’s desire to reduce the penalty of $770 million significantly. This would be achieved by excluding ODL transactions and implementing various expense-cutting measures.
Drawing connections to a similar case involving LBRY, Deaton emphasized the challenging and time-consuming nature of these legal processes. It took an additional eight months of litigation before a fine of $130,000 was ultimately imposed.
The remedies phase will involve additional discovery and litigation, potentially extending the process for several months. Deaton offers an estimation of a final judgment expected in late summer 2023, with the possibility of appeals stretching well into 2024.
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The ongoing lawsuit between Coinbase and the SEC holds significant importance. If Coinbase manages to dismiss the case, it could potentially influence a change in the SEC’s approach towards crypto companies like Ripple. However, until they resolve, both parties appear prepared for a lengthy legal battle.