Ripple Winning in SEC Lawsuit Would Be Bigger Than Settlement, Crypto Lawyer Gives Reasons

Speculation about a Ripple settlement with the SEC started to swirl around after FOX Business journalist Eleanor Terrett hinted that the regulator might soon make a big announcement. However, it turned out to be about the Kraken settlement, not XRP.

A larger majority of respondents in a late December 2022 poll conducted by CryptoLaw founder John Deaton believed that the lawsuit would end in a settlement rather than a verdict.

Deaton, however, believes a settlement might come only after a verdict is received from the ruling judge. This may be particularly relevant given that, before the lawsuit was filed in December 2020, Ripple tried to settle with the SEC.

A win would be bigger than a settlement, crypto lawyer states arguments

Ripple CEO Brad Garlinghouse stated that a settlement with the SEC could only be considered if XRP is deemed a nonsecurity.

Along these lines, Bill Morgan, a lawyer and crypto enthusiast, believes the SEC has more to gain if a settlement occurs before a summary judgment decision is reached.

The SEC obtains a lot from a settlement with Ripple even if the settlement allows for XRP not to be considered a security & sold by Ripple:
1. A big fine;
2. An outcome that justifies the lawsuit;
3. No disclosure of Hinman emails;
4. No adverse decision on fair notice defense /1

— bill morgan (@Belisarius2020) February 9, 2023

“The SEC obtains a lot from a settlement with Ripple even if the settlement allows for XRP not to be considered a security and sold by Ripple,” he wrote.

Morgan cited five reasons why the SEC could gain more if this happens: First, Ripple might be forced to pay a big fine. Second, this would be an outcome that justifies the lawsuit. Third, no disclosure of Hinman’s emails to the public. Fourth, no adverse decision on the fair notice defense. Perhaps most importantly, fifth, he says there will be no decision on the “blue sky investment contract issue.”

The crypto lawyer further added, “As we saw this week, this argument has been made a second time, by the defendants in SEC v. Wahi. Imagine if Ripple wins on this point.”

He adds a catch, however: “Based on settlement logic. Invalidated if non-legal motives too strong e.g. political, protecting legacy financial system.”

This implies that his viewpoint might be invalidated based on strong non-legal motives.