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- There is widespread sympathy for Ripple, which saw the SEC do nothing for seven years while XRP was widely downloaded and then sold in secondary markets. Ripple officials sought unsuccessfully to comprehend the regulators’ stance on XRP, according to public information.
- Ripple believes that if XRP is a security, the SEC failed to provide fair notice because the SEC provided no guidance despite several requests, with the exception of Hinman’s 2018 speech designating Bitcoin and Ethereum as non-securities.
- The SEC’s enforcement-based regulation is currently on trial, with SEC Commissioner Hester Peirce criticizing the practice as being damaging on multiple occasions. As further evidence of the SEC’s misuse of power emerges, calls for FTCA reform are expected to grow in number.
Surprisingly, the FTCA bars litigation against government agencies like the SEC for intentional wrongdoing including defamation, abuse of process, or malicious prosecution – a common-law intentional tort designed to deter frivolous lawsuits. The SEC v. Ripple case has enraged XRP holders, who believe the regulator has betrayed its mission of protecting consumers by filing a complaint against Ripple Labs for an alleged unregistered securities sale, which resulted in the delisting of XRP in the US and widespread uncertainty about the digital asset.
FTCA Represents An Obstruction To Law
Ripple Labs, one of the most well-known blockchain businesses in the world, has also expressed displeasure with the SEC’s cryptic behavior, which comes at a time when the financial regulator should be providing regulatory clarity for the new asset class. There is widespread sympathy for Ripple, which saw the SEC do nothing for seven years while XRP was widely downloaded and then sold in secondary markets. Ripple officials sought unsuccessfully to comprehend the regulators’ stance on XRP, according to public information.
The tables have flipped a year and a half later. The SEC is keen to keep its internal materials hidden from Ripple and the public, and there has been evidence of a conflict of interest.
As this is no longer a standard civil dispute, public opinion is increasingly siding with Ripple. It’s about unbridled abuse of enforcement power by federal administrative agencies, according to Frank Francone, a policy fellow at the Centennial Institute and a California attorney, who explained that even if Ripple wins, there is no remedy for the SEC’s abuse under current federal law due to a gap in the law that needs to be fixed. According to the op-ed, the SEC’s tactics — wide claim coupled with aggressive discovery motions – strongly suggests the SEC expected Ripple to immediately fold and beg for a settlement, and that its legal arguments would never be put to the test in court.
They guessed incorrectly. Ripple is fighting back, and if the SEC’s broad arguments are successful, they could wipe out trillions of dollars in stored wealth across several cryptocurrencies facing the same destiny as XRP. Ripple believes that if XRP is a security, the SEC failed to provide fair notice because the SEC provided no guidance despite several requests, with the exception of Hinman’s 2018 speech designating Bitcoin and Ethereum as non-securities. The SEC’s enforcement-based regulation is currently on trial, with SEC Commissioner Hester Peirce criticizing the practice as being damaging on multiple occasions.
An Misuse Of Prosecutorial Authority
The SEC’s actions in SEC v. Ripple raise major concerns about what recourse defendants and XRP holders may have against an overzealous government body that has abused the authority entrusted to it by Congress. Unfortunately, no remedy exists today, regardless of how ill-founded or malevolent the SEC’s activities are – the doctrine of sovereign immunity and the Federal Tort Claims Act (FTCA) shield the SEC and its officers from any liability for deliberate misconduct, Frank Francone stated. Surprisingly, the FTCA forbids lawsuits against government agencies like the SEC for intentional wrongdoing including defamation, abuse of process, or malicious prosecution — a common-law intentional tort designed to deter meritless lawsuits.
Frank Francone went on to say that the commission’s own assessment of the case’s merits, as well as its motivations for pursuing this enforcement action, should be thoroughly investigated. It is a misuse of prosecutorial authority, according to Ripple’s Garlinghouse, but it might also constitute malicious prosecution. Frank Francone asked Congress to alter the FTCA since the SEC and its officials are protected under the doctrine of sovereign immunity, regardless of how vicious their activities are. As further evidence of the SEC’s misuse of power emerges, calls for FTCA reform are expected to grow in number.
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Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
