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In a recent hearing of court, US Security and Exchange Commission has got time till 17 February to respond against the court’s earlier order to report documents against Ripple Labs.
Recent development in the case
Since Ripple labs had been sued as unregistered security for selling XRP tokens by the US Security and Exchange Commission, it has been a topic across the crypto region. The lawsuit can result in drastic changes in crypto regulations and bring changes in perception regarding digital assets either positively or could make a wrong impression.
During the last hearing of the case on 13 January, Magistrate Judge Sarah Netburn ordered the SEC to provide some documents related to previous cases and commissions working on them. Those documents included notes of private meetings of SEC officials with third parties related to Ethereum during that case, other than that draft of the speech of former SEC director William Hinman in 2018, which stated that BTC and ETH were not securities.
After the order, Ripple officials and XRP investors almost considered their final call for a win. Still, in a recent hearing, the commission got aid from the reporting document till 17 February. SEC repulsed against the order, and Judge Sarah gave more time as the commission demanded.
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What’s the case actually
All this had started with the SEC lawsuit filing against Ripple Labs on 22 December 2020. The allegations from the commission were that the network had traded XRP worth $1.3 billion without registration with the SEC.
SEC’s allegations on Ripple
The commission said that XRP should be classified as a security because it is used for money transfer on Ripple’s platform, during which the network got to finance. Some executives also got their share during the sales of XRP. According to SEC regulations, securities registration is compulsory, and if it’s a decentralized network, then payment and financial information must be disclosed. Its commission’s responsibility is to ensure safeguarding the investors and customers.
Ripple push back
However, it is the responsibility of government authorities to take action against any company’s wrongdoings, and most matters get sorted out internally by some fines. But here, Ripple didn’t pull back and instead, and it decided to fight against commissions demands.
San Francisco crypto exchange said that the SEC is biased while applying the definition of ‘security’ on any cryptocurrency. In a similar situation with Ethereum, the commission had granted bailout for the same allegations without any penalties. But they are now against XRP, which has the same allegations even though it did not violate any existing regulation or law.
Another reason for Ripple’s resistance against SEC is because no fair notice had been given to the company about violation of regulations. Even recently, SEC itself has admitted that there was no statement made regarding the classification of XRP as security.
Impact of this case
This case already has gotten a lot of attention. Its result will decide whether there will be more strict regulations on cryptocurrencies or the authorities will be bound to stay within limits, and crypto firms would get more freehand for their workings.
Currently, cryptocurrencies are regulated under lighter regulations of the US’s CFTC; if Ripple wins, it will continue, and crypto firms will work free as they are doing. But in the case of the SEC winning the case, the commission can implement more strict regulations according to commissions working.
The case is still under development, but many pro-crypto enthusiasts and people related to Ripple, their lawyers or executives, are optimistic about their win. Many analysts have also predicted soon, the court will resolve the matter, and the case to last till April 2022 at most.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
