There’s been a lot of good news in the crypto world lately with some of the biggest being the SEC dropping a number of lawsuits against crypto firms such as Coinbase, Kraken, and a few others. This has caused a lot of excitement, but there is still one lingering lawsuit that has not been announced as ending and it is probably the most well known one out there. It’s the SEC Lawsuit against Ripple. Many people now are asking when will it end?
Today I’m going to be taking a look at some possible, but logical reasons why the SEC has not officially thrown out its lawsuit against Ripple. To be frank, this lawsuit is really the last peg, so to speak, of holding XRP back from its full potential. The floodgates are ready to burst open because there are quite a few XRP ETF applications sent into the SEC showing huge institutional interest in this particular cryptocurrency. I’m going to talk about how the lawsuit started in the first place, the interesting developments and rulings in that lawsuit and then why the SEC still hasn’t thrown it out even with a massive regime change that is very pro crypto.
The Beginning of the SEC Lawsuit Against Ripple
A lot of people have a great dislike of the now former chair of the SEC which was Gary Gensler. I can certainly understand why because under his leadership, he has reletenlesly turned the SEC against crypto and launched a large amount of lawsuits against different crypto companies. The SEC vs Ripple lawsuit though was actually not issued by him. It was launched by the SEC chair before him who was Jay Clayton. The lawsuit was filed in December of 2020 which was one of the last major acts at the SEC before his resignation.
This was kind of a shock because he seemed to generally favor crypto and has ties to Ethereum. The lawsuit he issued against Ripple stated that the sale of XRP is in violation of securities laws because XRP was not registered with the SEC. Well there’s a major problem with that because crypto in general at that time has no kind of classification so the fact that the SEC accused Ripple of a violation of securities laws because of the sale of XRP seemed to have come out of left field. After all, he did say that Bitcoin and Ethereum are not securities and more in tune with commodoties.
Because of the lawsuit, the price of XRP took a massive nose dive and had struggled to recover for a long time until more recently when the price rapidly increased during the last six months, getting very close to its all time high. The lawsuit also caused a number of crypto exchanges to delist XRP one of which was Coinbase. Uphold was one of the very few to keep the crypto on its exchange. Because of that, I’ve been able to accumulate XRP over the years until I’ve reached my target.
Ripple has vigorously faught against the SEC’s accusation of XRP being an unregistered security over the last four years and the company actually did receive a partial victory. The judge in the lawsuit ruled that XRP is not a security when sold or traded on secondary markets, aka, cryptocurrency exchanges. That definitely was a good victory and the price of XRP briefly flirted with getting into the $1 dollar range before retreating. Now even though Ripple did get a victory in that regard, the judge also ruled that sales of XRP to institutions is a violation of securities laws and that they should pay a fine.
The SEC wanted Ripple to pay a fine of around $2 billion. Ripple felt that it was too high and unrealistic and the judge agreed and brought the fine down to $125 million. The judge also barred the company from future direct sales of XRP to institutions. Ripple still doesn’t feel they did anything wrong, but nevertheless, they still agreed to the judge’s order. Ripple set $125 million aside to pay the SEC and thus that marked the end of this long running lawsuit right? Wrong!
The SEC Appeals A Ruling in the Lawsuit
One of the last major acts that Gary Gensler did before leaving the SEC is to file an appeal in the US Second Circut Court of the ruling in the Ripple lawsuit where the judge said that the programmitc sales of XRP (on secondary markets in retail) do not constitue a violation of securities laws and are not securities. The SEC (mainly Gary Gensler) did not like that ruling at all and definitely wanted to challenge it. They filed briefs before the deadline back in January thus starting the appeal process. Ripple said they intend to fight this vigoursly and that the SEC has no grounds to appeal this.
Now, since the appeals process has been opened in that court, there have been MAJOR changes at the SEC that could signal that they intend to end this appeal and the lawsuit once and for all. What this shows is that Gary Gensler wasted time and money filing this pointless appeal. The good thing is that a lot of other people at the SEC do not agree with what Gary Gensler has done during his time there and
are now undoing a lot of the things he had done while he was the main chairman.
I am very curious to see how the appeals court is going to handle this now that the SEC has back tracked and ended most of its other lawsuits against crypto companies. One thing is for certain though is that people know that XRP is about to explode like never before and has had a nice pop already. They know the end of this baseless lawsuit and appeal is nearly at hand. The price of XRP has rapidly increased since at least the end of November and threatens to go higher even more soon. How will this lawsuit and appeal end? Let’s talk about how that could come about.
The End of The Lawsuit is VERY Close
The SEC has turned VERY pro crypto since Gary Gensler resigned. Why did Gary resign? Because President elect Donald Trump has said he intended to fire him because of the damage he has done to crypto in the United States and is sick of it. Gary knew his days were numbered and so on the day of President Trump’s inauguration, Gary Gensler officially resigned. People were finally breathing a sign of relief because the reign of terror that the SEC launched against crypto during the last four years has finally come to an end.
As I mentioned earlier, the SEC has now in turned dropped nearly all of its lawsuits against different crypto firms and companies. There is still the one though that everyone is talking about and of course it’s the SEC vs Ripple case. There is so much speculation of when it will officially end and the crypto markets are bracing for it. Interest in XRP has skyrocketed like never before because of the potential end of this lawsuit.
Some people though are wondering why the SEC hasn’t dropped it already. Well, it’s a little more complicated, but unlike the other lawsuits that the SEC dropped, the SEC vs Ripple case had an official ruling, a fine Ripple is ordered to pay from one of those rulings, and official appeal by the SEC. This has made things a bit complicated because from Ripple’s point of view, why should they have to pay a fine when the SEC is now coming out and saying that XRP may never have really been a security and is more of a commodity than anything? I definitely understand where Ripple is coming from in this case because now that the SEC has changed their stance towards XRP and crypto in general, why should Ripple still continue to be punished?
There are major hints that the SEC and Ripple have been in heavy negotiations and talks for this reason. Many institutional firms can smell that this case is nearly at an end and so they have filed multiple XRP ETF applications with the SEC. There are over ten XRP ETF applications that have been filed and the SEC has acknowledged nearly all of them, but are delaying approval of them for a little bit, more than likely until the new chairman of the SEC is appointed and sworn in (which is most likely going to be Paul Atkins) and take a look at these applications and likely give approval or not.
If there are negotiations going on between the SEC and Ripple, which I do believe there are, what I believe is going to happen is that the SEC will officially say that XRP is a commodity and not a security and reach an agreement with Ripple to end the lawsuit and appeal. I definitely think that once this happens, XRP is going to pop hard. I don’t know if Ripple is going to have to pay the SEC that $125 million dollar fine or not, but I do think we will see that the SEC not label XRP in any kind of sale as a security and is instead a commodity.
I do believe we are much closer to an end of this lawsuit than many people realize and I certainly believe it will be over before the end of the year, quite possibly even before the beginning of summer. We’ll just have to wait and see. While I am not a financial advisor, I certainly believe that now is a great time to get into XRP while it is at its current prices. The $2.30 range is a great price to get into because XRP definitely won’t stay there and will go much higher when this lawsuit ends. Once the utility phase moves in, then the price of XRP is really going to skyrocket like never before. If you missed out on Bitcoin, now is a great time to get into XRP because it has quite possibly the best utility case of any crypto that’s at there. Now is a good time as any to prepare for the end of this lawsuit.