As speculation swirls around the possibility of a resolution between Ripple and the United States Securities and Exchange Commission (SEC), prominent XRP lawyer John Deaton, who represents numerous XRP tokenholders, has shed light on the potential steps both parties might take in the event of a settlement.
Deaton emphasized the profound implications of the ongoing legal tussle between Coinbase and the SEC. He outlined a scenario wherein a favorable ruling for Coinbase, in their lawsuit against the SEC, could pave the way for a Ripple-SEC settlement. Such a ruling would signify that token sales on the exchange are not subject to U.S. securities laws, though it may not extend to cover crypto staking.
Deaton elaborated:
“The possibility of Ripple and the SEC reaching a settlement before the end of the year hinges on Judge Failla granting Coinbase’s motion to dismiss, or partially granting it, with the finding that token sales on an exchange conducted through a blind bid/ask transaction fall outside the purview of U.S. securities laws.”
Should the motion to dismiss be granted, the SEC’s capacity to pursue an appeal would be significantly curtailed, rendering a settlement a viable and logical option. Deaton underscored that even if an appeal were still on the table, the agency’s authority in the matter would be greatly diminished.
In a filing dated September 1, Ripple noted that the summary judgment did not address the legal foundation for an interlocutory appeal. Ripple’s opposition was rooted in the argument that the SEC had departed from established legal precedent, particularly concerning the application of the Howey test to XRP token sales.
The SEC launched a lawsuit against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen in December 2020, prompting several cryptocurrency exchanges to delist XRP to avoid potential legal entanglements. However, following a favorable ruling by Judge Analisa Torres in July, many exchanges indicated their intention to relist the token.
In 2023, the SEC has pursued legal action against various cryptocurrency firms on allegations of securities violations, including high-profile cases against Binance and Coinbase. On August 29, asset manager Grayscale achieved a legal victory against the SEC through an appeal that compelled a review of its application for a spot Bitcoin exchange-traded fund.
