Update on Ripple v SEC Case November 1 2024
The protracted legal struggle between Ripple Labs and the Securities and Exchange Commission (SEC), which seemed to reach a conclusion in August, has been reignited as the persistent regulatory body has opted to appeal the final decision. This appeal specifically challenges the ruling that deemed Ripple’s programmatic sales of XRP as not constituting securities violations.
In light of this renewed contention, observers of the situation are not expected to witness any significant developments until early 2025. An October 31 filing has revealed that the U.S. Court of Appeals for the Second Circuit has established January 15 as the deadline for the SEC to submit its main brief.
Additionally, the Court has indicated that if this deadline is not met, Ripple’s request to dismiss the case will be granted. They have also made it clear that no extensions will be permitted.
Speculation surrounds the timing of this deadline, as it falls after the inauguration of the next U.S. President. Should Kamala Harris emerge victorious, it is anticipated that the SEC’s current strategy will remain unchanged. Conversely, a Donald Trump administration might seek to replace Gary Gensler, potentially leading to a shift in the regulatory agency’s stance towards various cryptocurrencies.
Ripple continues to assert that the status of XRP is unequivocal. One of the most debated outcomes of the summer ruling was the requirement for Ripple to pay $125 million—significantly less than the $2 billion originally sought by the SEC. The ruling also affirmed that XRP does not meet the criteria of a security and that certain sales of the token do not violate securities laws.
Furthermore, Ripple has challenged the relevance of the Howey Test, which is used to determine whether an asset qualifies as a security. This test, established in 1946, has been both criticized for its age and defended for its adaptability, allowing regulators to address emerging issues without waiting for protracted legislative or judicial processes.
Regardless of the ongoing debate surrounding the Howey Test, Ripple insists that XRP enjoys a unique legal clarity within the cryptocurrency space, a distinction it shares only with Bitcoin (BTC). Ripple emphasizes that XRP is not a security, a point they regard as critical.
In a recent post accompanying Ripple’s Form C filing on October 24, Chief Legal Officer Stuart Alderoty accused the SEC of attempting to create confusion within the industry. He stated, “As we navigate this process, it’s important to recognize the SEC’s broader strategy: to generate distraction and confusion for both Ripple and the industry. But honestly, it’s just background noise now. The hardest part of the battle is over. Ripple’s business continues to grow stronger every day, even amid this appeal process.”
The ongoing legal dispute has also had a notable impact on XRP investors, as the token’s price has remained unstable and depressed throughout 2024—a striking contrast to the overall bullish trend in the cryptocurrency market this year. Year-to-date (YTD) data shows XRP has declined by 15.15%.
XRP YTD stock price. Source: Finbold
However, the filing on October 31, which likely signaled a lack of immediate surprises in the coming months and raised speculation about the SEC potentially missing the deadline, saw the token’s price rise by 2.33% within a 24-hour period.
Lastly, Ripple’s recent action of unlocking 1 billion XRP from its escrow system on November 1 had no noticeable impact on the cryptocurrency’s market price.
Featured image:
Koshiro K. Ripple logo seen in an iPhone screen on SEC. Digital image. Vancouver, CANADA – Apr 30, 2024. Shutterstock, April 30, 2024. Date retrieved: November 1, 2024.