The rift between the Security and Exchange Commission (SEC) and Ripple lab, developers of XRP cryptocurrency does not look like it would end anytime soon as both parties have said a settlement does not appear to be in sight.
SEC and Ripple got into the legal battle before the end of 2020. SEC dragged the fintech firm to court for claiming that XRP is not a cryptocurrency as Ripple claims, the commission says XRP is a security and Ripple has been trading illegal security in the U.S. SEC dragged two other Ripple executives, Brad Garlinghouse and Chris Larsen to court also.
After much back and forth from both parties on the lawsuit, the latest development on the case is that SEC and Ripple have concluded that they won’t get out of court anytime soon.
No settlement in sight for Ripple, SEC
In a discovery letter dated February 15, 2021, by both parties addressed to Judge Analisa Torres, they claim there is no prospect of settlement for them both. In the document, both sides said that they “do not believe there is a prospect for settlement at this time” since they had earlier deliberated on the issue.
Both sides also have disagreed regarding the discovery for the trial, as they debated on the evidence, witnesses, and information that they will be presenting to the court.
The SEC which appears to be struggling in the case against Ripple is finding it hard to take five confirmations beyond the 10 usually allowed over allegations. They intend to settle by asking the court to compel Ripple to provide documents and relevant deposition testimony to their argument.
The XRP developers have refused to comply.
Former SEC lawyer tips balance in favor of Ripple
Former SEC executive, Joseph Hall, has predicted that Ripple would prevail in the legal battle against the SEC. The former executive made this known in an interview on Thinking Crypto. He described the lawsuit as pretty astonishing.
According to Hall, he argues that a judge reviewing the lawsuit is likely to be influenced by the fact that the case doesn’t “seem to have been involving any imminent investor harm.”
“The judge just might say, ‘If XRP was a problem, you’ve known about XRP since 2012. Why now? What is going on here?’ So I think we start out with the XRP case with a factual posture that may not be the best for the SEC. So I think that there’s a good chance – I can’t give you a percentage on that – I think there’s a good chance that the SEC loses this one.”
SEC vs Ripple what has happened?
Ripple especially has been at the receiving end of the backlash between it and the SEC. The fintech firm has suffered as a result of the lawsuit and allegations from the commission.
Firstly, it was the sharp plunge in the price of XRP as many hodlers had to dump their coin to avoid any potential lawsuit as illegal security investor. Similarly, exchange firms, Coinbase, Binance US, Bitstamp all began to delist/ suspend trading ripple on their platform as a result of the lawsuit.
Business partners of the fintech firm like MoneyGram, Banco Santander, began to issue statements regarding their positions with the San Fransisco-based firm after allegations from the SEC. Most importantly, the crypto community was left divided with many believing that XRP is actually a security and the crypto community would do well without them.
Brad Garlinhouse, however, promised to make it a difficult one for SEC as he is determined to exonerate Ripple and XRP in the ongoing trial.
The first pretrial conference for the case is set to take place on February 22. The letter added that both parties have agreed to August 16, 2021, as the deadline for the discovery phase, during which they will assemble all evidence and argument.