SECRipple v/s SEC lawsuit: the SEC’s case against Ripple, a dispute over legal advice

In 2012, the US SEC filed a lawsuit and wrote two memorandums for the blockchain company Ripple Labs as Ripple and its top executives contemplated the launch of XRP, a new cryptocurrency designed to compete with Bitcoin. The popular Ripple v/s SEC lawsuit in the highly volatile cryptocurrency market is gaining attention again!

The US Securities and Exchange Commission’s win would boost the Ripple vs SEC case to regulate much of the crypto market, while a loss would reinforce calls for clearer laws. While the Securities and Exchange Commission hasn’t announced major actions against big crypto exchanges, the commission has threatened to sue companies offering crypto lending.

The SEC’s case against Ripple, a dispute over legal advice:

The Securities and Exchange Commission alleged that Ripple and two senior executives conducted an illegal security offering, implying that XRP is a security, not a cryptocurrency. The SEC allegedly conducted an unregistered offering of $1.3 billion in XRP between 2013 and 2020.

Ripple Labs has countered the SEC’s allegations by saying that XRP is not, in fact, security. It is a useful tool in transferring value across borders through Ripple products, but it is not a security that should have been registered under the SEC’s regulations.

Ripple Labs isn’t just fighting with the SEC over the contents of the memorandums. Ripple is also at odds with the government about whether the advice of its counsel back in 2012 is protected by the attorney-client privilege.

Ripple, which never conducted an initial coin offering for XRP, argues that the SEC’s case has upended a maturing, decentralized market, causing billions of dollars in losses to XRP holders with no connection to Ripple.

Ripple Labs has raised a valid point in the case, arguing that the agency did not give the developer fair notice regarding its conduct potentially violating the law. Ripple insists that the SEC should have provided clarification on whether it regards XRP as a security because the government agency had ample time to do that. The outcome of the Ripple case will set a precedent for what follows in the crypto market industry’s regulations in the future.

The SEC has recently hinted that if Judge Sarah Netburn sticks to her previous ruling of ordering the production of said emails, notes, and drafts, the plaintiff will appeal to Magistrate Analisa Torres to make the final decision. The same goes for the Estabrook Notes, related to a meeting between ex-SEC’s Elad Roisman and Ripple’s Garlinghouse.

The end of the SEC vs Ripple lawsuit might be closer than ever and the light at the end of the tunnel is the bulk of emails and notes related to Hinman’s speech, an attorney linked to the case argued. John Deaton, an attorney reminded that Ripple lawyers informed the Court very recently that they believe the SEC could be concealing evidence that Hinman himself concluded it’s not a security.

John Deaton is positive that a court ruling in favor of producing the emails and notes will lead to settlement within two to three months or possibly sooner. Otherwise, there is a 50-50 chance of a settlement.