Will SEC Win Against Ripple Labs?

Most experts do not believe that the Securities and Exchange Commission (SEC) will be able to defeat Ripple. Due to the fact that the proceedings last several years, the court has already studied all possible arguments, which means that it is unlikely to overturn the decision

The SEC is trying to challenge the judge’s decision in the case against Ripple. BE[IN]CRYPTO editorial staff decided to find out what chances the SEC has for success and how the market may react to the regulator’s victory. For this purpose, we asked experienced experts to share their opinion on the prospects of further development of the conflict between the SEC and Ripple

What Happened And Why It Matters

On Aug. 18, the court approved the SEC’s request to appeal the case against Ripple. Due to this development, the media believes that there is a possibility for the regulator to prove the guilt of the California-based crypto project.

The SEC’s showdown with Ripple began in December 2020. The SEC accuses the crypto startup of illegally issuing and distributing securities as XRP tokens.

The first positive news on the SEC case against the crypto startup appeared on July 13. The judge concluded that private sales of XRP do not violate the securities law. That said, the judge held that the Ripple cryptocurrency could be considered a security in cases involving institutional sales.

Sponsored

Sponsored

The crypto community positively perceived the partial victory of the crypto project in court. The fact is that XRP is far from the only cryptocurrency in which the SEC saw the signs of a security. Many representatives of the crypto industry saw the chances of removing charges from other coins with the partial victory of Ripple.

SEC launched Appeal

A few days after the crypto project’s triumph, the SEC announced plans to appeal the court’s decision. The appeal request approved by the judge opened the door for the Commission to prove Ripple’s guilt.

In turn, the crypto project’s representatives opposed the SEC’s appeal. Ripple’s lawyers noted that the Commission failed to prove that XRP is a security using the Howey test. Recall the tool is used to determine the status of financial assets.

This development accompanied the recent correction in the crypto market. If the SEC proves that XRP is a security, other coins that have fallen into the regulator’s crosshairs will also be at risk.

BE[IN]CRYPTO’s editorial team spoke to market experts about whether the SEC can overturn the judge’s ruling and get Ripple convicted.

Will the SEC Be Able to Finish off Ripple?

Alexander Goodman, founder of the IT company GCrypton, does not rule out the possibility of the Commission’s victory. At the same time, our interlocutor noted that Ripple has enough arguments to defend its position.

The expert with the crypto exchange StormGain, Dmitry Noskov, believes that the court will leave in force the decision on the partial victory of the crypto project. Noskov explained:

“It is unlikely that the regulator will be able to achieve a review of the case, given that the trial has been going on since 2020 and the court has already repeatedly studied all the materials and taken note of the arguments on both sides.”

Noskov also doubts that Ripple can prove its complete innocence.

Nikolai Zhuravlev, CEO of CFA.RF supported the opinion of Noskov. He also believes that Ripple has a chance to prove the SEC’s assessments wrong once again.

The optimists were joined by the executive director of one of the largest crypto exchanges, Bitget’s Gracie Chen.

The co-founder of 1EX Trading Board, Anton Nozdrachev, presented an alternative vision of the situation. He believes that the SEC wants to enforce fines against Ripple. Nozdrachev explained:

“I don’t think that the SEC’s goal is to “get” Ripple, which could lead to big financial and reputational losses for the company. The appeal filed is more of another attempt to warn other token issuers that they could be at the center of litigation.

I believe that the SEC is trying to collect fines from blockchain and cryptocurrency companies in order to funnel money into the treasury, which has been significantly depleted recently.”

What Will Happen to Market if SEC Defeats Ripple

Our interviewees believe that the Commission’s victory over the crypto project will be an extremely unpleasant precedent that will force many crypto companies to move out of the United States. The reason is that the recognition of XRP as security casts a shadow on many cryptocurrencies, which means that their issuers will have to refocus on other markets for survival.

Due to regulatory pressure in 2023, many companies have already announced their relocation from the United States.

Our interviewees also believe that the market’s inevitable reaction to the SEC’s victory over Ripple will result in a significant drop in the price of cryptocurrencies.

Got something to say about the Ripple-SEC dispute or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or X (Twitter).

For BE[IN]CRYPTO latest Bitcoin (BTC) analysis, click here.