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- 1 CryptoLaw founder explains what would happen if SEC wins against Ripple over XRP.
- 2 He hints that Ripple would appeal against extending the case by another few years.
A lawyer tried to decipher what would happen if the SEC wins the case against Ripple, ongoing since December 2020 over XRP. The infamous case between the United States Securities and Exchange Commission (SEC) and Ripple over the status of their token XRP deemed a security or not. The issue is significant for the crypto industry as it can disrupt the whole industry.
What if SEC wins Against Ripple over XRP?
The SEC filed a lawsuit against the Ripple network in December 2020, arguing that the token XRP is a security, the crypto company retaliated, and the case has been going on ever since. John Deaton, the founder of Crypto Law, tried to explain what could be the possible outcome of the case.
In the lawsuit filed by the SEC, it was claimed that the co-founder Chris Larsen, CEO Brad Garlinghouse, and others transpired to sell unregistered security worth $1.3 Billion. The case is being presided by Analisa Torres, a United States District Judge. It is said that she is insisting that the token is not a security.
If the financial watchdog wins the case, Deaton anticipates that Ripple could file an appeal but argues that “if Ripple loses to the SEC, there won’t be any money collected for years.” Ripple CTO David Schwartz hinted earlier that the network has no plans to buy back 10 Billion XRPs. Speculations surfaced that Ripple is raising around $5 Billion for the buyback, but CTO denied the claims.
Deaton further argues that if the SEC wins the case, Ripple would appeal against the judgment, and the circus would continue for another two to five years. He further states, “Assuming the SEC wins, and the civil case lawyers get a win because the judge in California follows Judge Torres’ ruling,” They would appeal. Then the SEC would have $1.3 Billion.
John hints that the regulating agency might try to offer payback or a fund for the token holders to sell their tokens. A similar scenario happened in Veritaseum. He stated, “If I were the Plaintiff’s lawyer in the civil case, I would want the SEC to lose because the SEC winning will gut the damages for the civil case.”
He also hinted that the token holders would get more money from the SEC fund if there were a recovery scenario in the civil case. The attorneys would get around 25 to 35% of the recovery as their fees. This is before the cost of the litigation is subtracted from the fund. Moreover, If the Supreme Court agrees to take the case, Ripple will emerge victorious.
The Hinman documents covering the 2018 speech of the former SEC director for the Division of Corporation Finance, William Hinman, were recently released. The documents hint towards the classification of digital assets. Brad Garllinghouse feels these documents could help Ripple in the case and might even lead them to victory.
Garlinghouse reported in May 2023 that the company had spent nearly $200 Million to fund the legal dispute. He also asserted that the case outcome would be crucial for the crypto industry.
Experts agree that if the agency wins, this case can be used as an example to term every other token as a security. If so, the issuers of these tokens, if rebranded as securities, will have to register under the SEC. Considering the ongoing crackdown against the industry and the slew of cases against the crypto entities. The gravity of the case increases.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
