Amidst ongoing speculation surrounding a potential resolution between Ripple and the United States Securities and Exchange Commission (SEC), attorney John Deaton, who is representing a substantial number of XRP token holders, has outlined the possible courses of action that the two parties might take should they decide to settle their legal dispute which is shaped by several critical factors, including the outcome of the ongoing legal battle between Coinbase and the SEC.
In this context, he emphasizes that if the judge overseeing the Coinbase case were to grant the exchange’s motion to dismiss, it would carry significant implications for the broader crypto industry. Specifically, it would suggest that token sales conducted on exchanges are not subject to U.S. securities laws, although the legal status of crypto staking would still be subject to ongoing litigation.
In a detailed post, Deaton states,
“The only way Ripple and the SEC (could) settle before the end of the year is if Judge Failla grants the Coinbase motion to dismiss or partially grants it – finding token sales on an exchange in a blind bid/ask transaction do not fall under U.S. securities laws.”
This statement underscores the pivotal role that the Coinbase case plays in potentially paving the way for a settlement between Ripple and the SEC.
If the motion to dismiss in the Coinbase case is approved, it would significantly limit the SEC’s ability to pursue an appeal. This limitation could make a settlement a more attractive and pragmatic option for both parties. Deaton further clarifies that even if an appeal were technically possible in such a scenario, the SEC’s authority and leverage would be greatly diminished.
Coinbase, Ripple vs SEC
Adding another layer of complexity to the situation, Ripple filed a document on September 1, 2023, indicating that the Summary Judgment issued did not adequately address the legal foundation for an interlocutory appeal. Ripple’s opposition was grounded in its argument that the SEC had deviated from established legal precedent, particularly concerning the application of the Howey Test to XRP token sales.
This legal dispute between Ripple and the SEC began in December 2020 when the SEC initiated a lawsuit against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen. The lawsuit led to several cryptocurrency exchanges delisting XRP to avoid potential legal complications. However, following a ruling in the Torres case, many of these exchanges have expressed their intentions to relist XRP or explore such possibilities in the future.
Furthermore, it is worth noting that in 2023, the SEC has been actively pursuing various cryptocurrency firms on allegations of securities violations, including major platforms like Binance and Coinbase. Notably, on August 29, asset manager Grayscale achieved a legal victory against the SEC through an appeal that mandated a review of its application for a spot Bitcoin exchange-traded fund (ETF).
Source: https://www.cryptopolitan.com/coinbase-vs-sec-ripples-escape-uncovered/