The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) took a significant turn recently, with Ripple emerging victorious on a crucial point.
The court ruled that XRP does not qualify as a security. However, as the legal timeline progresses, there is growing speculation about whether the SEC will challenge this ruling.
SEC Faces Appeal Deadline
The SEC is under pressure as it faces a deadline in September 2024 to decide if it will appeal the August 2024 ruling. This decision came as a major development, stating that XRP, in itself, is not a security.
Since the ruling was issued, the SEC has remained silent, prompting much speculation about its potential next move. Some believe the SEC might attempt an appeal, while others argue it lacks a strong foundation for such action.
Ripple CEO, Brad Garlinghouse, addressed these concerns during his speech at Korea Blockchain Week 2024 (KBW2024). He emphasized that the SEC does not have a valid legal argument to reverse the decision. According to Garlinghouse, the current legal outcome, which deems XRP non-security, stands on solid ground.
He further expressed optimism that the case might be approaching its final stages. Garlinghouse also hinted that changes in the SEC’s stance could arise with new leadership following the U.S. elections, which could reshape how the regulator approaches cryptocurrency regulations.
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Legal Experts Weigh In
The core issue revolves around the legal classification of XRP. Crypto legal experts have been following this case closely, and some have voiced support for Garlinghouse’s position. Prominent pro-crypto lawyer Bill Morgan recently weighed in on the matter, offering his insights.
Morgan responded to a statement from crypto commentator Michael Branch, who pointed out Garlinghouse’s confidence in the ruling being upheld. Morgan agreed, stating that the ruling’s central finding—that XRP itself is not a security—leaves little room for the SEC to challenge it.
Drawing comparisons to a previous case, SEC v. Payward Inc. (the Kraken case), Morgan highlighted how the court similarly dismissed the SEC’s arguments, noting that the agency failed to show that the tokens themselves could be considered securities.
In SEC v. Payward Inc., the court ruled that the SEC’s argument about tokens being securities could not proceed. This precedent strengthens the position that XRP, as a token, does not inherently fall under the definition of a security. Morgan’s analysis reinforces the sentiment that the SEC would struggle to present a credible argument to overturn the ruling.
Ripple’s Ongoing Legal Battle
Despite this partial victory, Ripple’s legal challenges are not entirely over. While the court’s decision on XRP has been a positive development for the company and its community, the SEC’s broader regulatory efforts in the crypto space are still ongoing. Ripple must remain vigilant in navigating its legal strategy as the case advances.
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