The United States Securities and Exchange Commission has filed a complaint against Ripple Labs and separately against the founders Brad Garlinghouse and Chris Larsen. The company has been charged for the sale of unregistered securities, implicitly pointing to XRP as a security.
When the XRP was delisted from the cryptocurrency exchanges in the United States, the industry reacted to this act. The partnerships with Ripple were soon broken, including MoneyGram, which was approached by the ex-Ripple Co-founder Jed McCaleb and its new blockchain competitor, Stellar.
Talk of an almost inevitable settlement with the SEC soon emerged, with high-profile figures within the XRP community planning how such a deal would look. In June 2021, attorney Jeremy Hogan said he did not see the judgement closing until early 2022 or maybe January.
The settlement likely to happen
The potential settlement will likely happen after the close of fact discovery, and that is now early September and even more likely to be after October 16. This might have changed dramatically after a series of strange things happened since June, culminating in the silence from Ripple after the scheduled deposition of William Hinman on July 27.
According to Jeremy Hogan, the sworn testimony never took place. The lawyer does now no longer suppose that Director Hinman’s deposition happened last Monday. He questions, if it had, then where is the transcript filed under seal for an in-camera overview through the judge, and wherein is the movement to compel Hinman to reply to positive questions?
There have been strange things happening as the judge granted the defendant’s motion regarding discovery related to Bitcoin and Ether. However, the SEC did not hand over the documents despite risking monetary sanctions from the court.
Documents to be completed soon
The agency had promised to complete the production of the internal documents before July 2. However, during the hearing, Ripple counsel said that they did not receive the internal documents. Then, the judge told the counsel to file a brief the next week, but Ripple never replied.
The two SEC Commissioners’ public statements last week admitting to a lack of clarity within the digital asset ecosystem. But SEC’s commissioner believes that Ripple’s Fair Notice Defense was valid-that market participants do not have fair Notice in the crypto space.
The public statement was added to Ripple Labs and the individual defendants’ motions on fair notice and to dismiss the case, respectively. The SEC has given the responsibility for both letters, but only the individual defendants replied to complete their records.
Now, it would be interesting to see whether Ripple will be able to reply to the notices sent by the SEC and whether the 23 lawyers prove worthy enough to complete their tasks of filing a response to SEC.