The ongoing lawsuit between the SEC and Ripple started in December 2020 when the U.S. watchdog alleged that Ripple failed to register around XRP worth $1.4 billion worth as securities.
The lawsuit’s outcome could have far-reaching implications for crypto. If the SEC prevails, it could upend the way crypto companies operate, setting a precedent that the digital assets they offer users must be subject to the strict reporting and registration rules that apply to securities.
The climax of the lawsuit would affect not only Ripple but also the rest of the crypto industry. It is significant in the sense that it would be creating a precedent for the future, according to the CEO of Ripple, Brad Garlinghouse.
However, if SEC wins, it would change how the companies run and, in this case, also would set a precedent that the digital assets offered to the users must be subject to the strict reporting and registration rules.
Ripple has also accused the SEC of prolonging the case by using delaying tactics. Stuart Alderoty, Ripple’s general counsel, says that the firm was left with no choice but to agree to the extended schedule.
Referring to the November 2021 speech of SEC chairperson Gary Gensler in which he states that the watchdog intends to “focus on bringing matters to resolution swiftly,” he said that the CEO advocates’ justice delayed is justice denied “when companies defend themselves from SEC bullying investigations/inquiries.”
The moment that crypto enthusiasts anticipated for long
The lawsuit is running at a crucial time for crypto assets. Since the time SEC made claims against Ripple in 2020, the industry has experienced some dramatic changes, such as the rapid growth and the influx of new players and asset classes such as NFTs, along with increased inspection of crypto assets in major markets like the U.S., Europe, the U.K., and china.
Alderoty calls the lawsuit against Ripple an indictment of the regulation-by-enforcement approach of the SEC.
The Gensler effect – how SEC Chairman has played crucial role
The battle between Ripple and the SEC has pushed Gary Gensler under the spotlight, who became in charge of the agency just four months after the lawsuit was filed.
Gensler also received a warm welcome from the whole crypto industry, including Ripple.
However, as soon as the newly made chairperson declared that he would be taking a strict stance on crypto, the attitude of the community changed. Alderoty attacking Gensler is now an everyday thing; he alleges he and the agency create as much market confusion as possible.
Ripple’s ongoing and then upcoming journey after lawsuit
Although the XRP has recovered from the crash of December 2020, the asset has shifted significantly as the crypto market is going through another phase of sharp volatility.
Ripple also reveals that the international growth of Ripple has not slowed due to the SEC lawsuit as its cross-border payments technology is constantly benefitting. Alderoty adds that “the business has been thriving outside of the U.S.”
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